Filing Information: May 2008, IDC #212231, Volume: 1 Storage Mechanisms: Disk: Market Analysis

M A R K E T AN A L Y S I S

W o r l d w i d e H a r d D i s k D r i v e 2 0 0 8 � 2 0 1 2 F o r e c a s t a n d A n a l y s i s : S h r u g g i n g O f f S t o r a g e T e c h n o l o g y C h a l l e n g e r s

John Rydning

I D C O P I N I O N

Worldwide hard disk drive (HDD) shipments increased by 15.3% in 2007 to surpass 500 million units. HDD shipments in 2007 exceeded expectations because of PC market dynamics that spurred portable PC demand and subsequently mobile 2.5in. HDD demand in the latter part of the year. In 2008, HDD shipments are expected to increase year on year by 13%, even in the face of economic uncertainty in the United States. HDD demand is growing in part because cheaper HDD storage on a price-per-gigabyte basis enables digital information to be captured and stored inexpensively and easily. Nevertheless, the growth rate for HDD unit shipments is slowing. The 2007�2012 compound annual growth rate (CAGR) for HDD shipments in this forecast is projected to be 9.2%. Comparatively, HDD shipments grew from 2002 to 2007 at a CAGR of 14.3%. The decline of HDD shipment growth rates is attributed mainly to the slower growth of large, mature end markets for HDDs and the use of higher-capacity disk drives in datacenters to combat the rapid growth of digital content. Despite slowing HDD shipment growth rates, both unit shipments and revenue in this HDD forecast iteration are higher overall than IDC's previous forecast. Key factors relevant with this worldwide 2007�2012 HDD forecast include the following:

! Flash-based solid state drives (SSDs) will reach cost and endurance thresholds that make possible increased penetration of SSDs in traditional HDD markets over the next several years. SSDs will curtail HDD demand in some markets, but the HDD industry will shrug off these and other competing storage technologies to attain consecutive years of record-setting HDD shipments and revenue.

! HDD markets least threatened by competing storage technologies such as enterprise storage systems, personal storage devices (aka external attached hard disk drives), and personal video recorders (PVRs) represented 23% of unit shipments in 2007 and 35% of HDD terabytes shipped. These same markets will procure nearly 40% of HDD units that ship in 2012 and represent more than 50% of HDD terabyte shipments.

! Successive generations of HDD products using perpendicular magnetic recording (PMR) technology will enable average HDD capacities to increase by a factor of nearly three times from 170GB in 2007 to more than 500GB by 2012.

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#212231 ©2008 IDC

T A B L E O F C O N T E N T S

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In This Study 1 Methodology ............................................................................................................................................. 1 Situat ion Overview 2 Hard Disk Drive Demand Drivers.............................................................................................................. 2 Hard Disk Drive Average Price-per-Gigabyte History ............................................................................... 3 Hard Disk Drive Industry Structure ........................................................................................................... 3 Future Outlook 9 Forecast and Assumptions ....................................................................................................................... 9 Market Context ......................................................................................................................................... 43 Essential Guidance 44

Learn More 45 Related Research..................................................................................................................................... 45 Definitions................................................................................................................................................. 46 IDC System Classifications....................................................................................................................... 48 Appendix: HDD Shipments and Revenue, 2006�2012............................................................................. 52

©2008 IDC #212231

L I S T O F T A B L E S

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1 Worldwide HDD Shipments by Vendor, 2006 and 2007: All HDD Form Factors.......................... 8

2 Worldwide HDD Revenue by Vendor, 2006 and 2007: All HDD Form Factors ............................ 9

3 Key Forecast Assumptions for the Worldwide Hard Disk Drive Market, 2008�2012.................... 10

4 Worldwide HDD Shipments by Major Application, 2004�2012..................................................... 18

5 Worldwide HDD Revenue by Major Application, 2004�2012 ....................................................... 19

6 Worldwide Enterprise-Class HDD Price per Gigabyte, 1998�2007.............................................. 25

7 Worldwide HDD Shipments for Enterprise Applications by HDD Form Factor, 2007�2012 ......... 26

8 Worldwide HDD Shipments and Revenue for PC Applications, 2007�2012 ................................ 27

9 Worldwide HDD Shipments for Portable PCs by HDD Form Factor, 2007�2012......................... 27

10 Worldwide HDD Shipments for Desktop PCs by HDD Form Factor, 2007�2012......................... 29

11 Worldwide HDD Shipments for Personal Storage Devices by HDD Form Factor, 2007�2012 .... 31

12 Worldwide HDD Shipments for Consumer Electronics Applications, 2007�2012......................... 32

13 Worldwide HDD Revenue for Consumer Electronics Applications, 2007�2012 ........................... 34

14 Worldwide Mobile-Class 1.0in. and 1.3in. HDD Analysis, 2007�2012 ......................................... 35

15 Worldwide Mobile-Class 1.8in. HDD Analysis, 2007�2012 .......................................................... 36

16 Worldwide Mobile-Class 2.5in. HDD Analysis, 2007�2012 .......................................................... 37

17 Worldwide Desktop-Class 3.5in. HDD Analysis, 2007�2012........................................................ 38

18 Worldwide Enterprise-Class 2.5in. HDD Analysis, 2007�2012 .................................................... 40

19 Worldwide Enterprise-Class 3.5in. HDD Analysis, 2007�2012 .................................................... 41

20 Worldwide HDD Shipments by Capacity Range, 2007�2012: All HDD Form Factors.................. 42

21 Worldwide HDD Shipments and Revenue, 2005�2012: Comparison of 2007 and 2008 Forecasts ..................................................................................................................... 43

22 Worldwide HDD Shipments Analysis: Consumption by HDD Form Factor, 2006�2012............... 53

23 Worldwide HDD Revenue Analysis: Consumption by HDD Form Factor, 2006�2012 ................. 59

#212231 ©2008 IDC

L I S T O F F I G U R E S

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1 Worldwide Average Price per Gigabyte of HDD Storage, 1998�2007 ......................................... 3

2 Worldwide Estimated HDD Industry TAM, 2008........................................................................... 5

3 Worldwide Ownership by HDD OEMs of Key HDD Component Manufacturing Capabilities and Remaining Independent Suppliers of Major HDD Components, 2006 .................................. 6

4 Worldwide Ownership by HDD OEMs of Key HDD Component Manufacturing Capabilities and Remaining Independent Suppliers of Major HDD Components, 2007 .................................. 7

5 Worldwide PMR and GMR HDD Shipments Share of Total HDD Shipments by Year After Technology Introduction............................................................................................................... 22

6 Worldwide Commercialized HDD Leading Edge Areal Density, 1998�2007................................ 22

7 Worldwide Personal Storage Device Installed Base Share of Home and Small Business/Small Office PC Installed Base..................................................................................... 30

8 Worldwide HDD Shipments and Revenue, 2005�2012: Comparison of 2007 and 2008 Forecasts ..................................................................................................................... 44

©2008 IDC #212231 1

I N T H I S S T U D Y

This IDC study presents an updated look at the hard disk drive market through 2012. It is valid as of May 2008, and it provides a forecast of HDD demand both by standard HDD industry form factors and for the following HDD consumption segments: portable PCs, desktop PCs, enterprise storage systems, servers, personal storage devices (aka external hard drives), and various consumer electronics (CE) products in a variety of CE markets. For comparison purposes, the tables in this document also include historical figures for 2004�2007.

The HDD market opportunities are discussed in terms of HDD OEM unit shipments, exit factory revenue, terabytes shipped, and compound annual growth rates for the period 2007�2012. Additionally, other metrics, trends, and relevant industry dynamics are analyzed in an attempt to provide the reader with a solid understanding of the current situation and future outlook for the worldwide HDD market.

M e t h o d o l o g y

The primary HDD shipment and revenue data for this study was collected through telephone and face-to-face interviews and surveys with HDD manufacturers, component suppliers, and HDD customers. Current and historical shipment data is the sum of all unit estimates for all HDD manufacturers. The data was verified using publicly reported financial information, related computer system and consumer electronic device research, and HDD component supplier data. All unit shipment and revenue data in this study reflects shipments by HDD manufacturers to both captive and noncaptive customers.

Various device and application forecasts from research groups internal to IDC are used as a primary source of data for constructing five-year HDD forecasts. Please note that this forecast reflects the HDD shipment opportunity by application only, not the forecast for the actual applications or devices themselves. Shipment lead times, inventory offsets, and other supply chain dynamics are also considered. For detailed forecasts of the various applications and devices, one should look to the specific research from the groups within IDC that produce these forecasts: Personal Computing, Servers, Storage Systems, Personal Storage, and Consumer Devices.

Five-year forecast estimates for HDD units and revenue are derived in part by analyzing historical HDD trends. These historical trends are put into the context of forward-looking HDD market and industry dynamics. Assumptions for each HDD demand consumption category and various HDD form factor forecasts (see the assumptions associated with the consumption discussion for each HDD segment � enterprise, PC, personal storage, and consumer devices) are also considered.

All shipment, revenue, and average unit price forecast figures for 2008�2012 are IDC estimates. Historical unit forecast and revenue data presented here are as published in prior IDC documents based on the taxonomies at the time the data was originally published.

Note: All numbers in this document may not be exact due to rounding.

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S I T U AT I O N O V E R V I E W

H a r d D i s k D r i v e D e m a n d D r i v e r s

The HDD industry posted record-breaking shipments and revenue for the third consecutive year in 2007. Unit shipments exceeded expectations, driven by higher than expected HDD demand from two specific markets: PCs and personal storage devices. The trend toward mobile computing is creating strong demand, in particular for mobile 2.5in. HDDs. Amplifying the mobile computing trend in 2007 were PC market dynamics that spurred portable PC demand in the latter half of the year and subsequently pushed mobile 2.5in. HDD shipments 37% higher year on year for compute markets. Aggressive HDD price erosion of mobile 2.5in. HDDs in the first half of 2007 was a major contributing factor that spurred upside HDD demand for portable PC markets. Lower mobile 2.5in. HDD prices, especially at 120GB and 160GB capacity points, enabled PC OEMs to sell a portable PC with more storage capacity at lower prices in the second half of 2007. Falling prices for other major portable PC components (i.e., microprocessors, DRAM, and displays) in the first half of 2007, coupled with a rapid decline in the value of the U.S. dollar, helped to create the perfect storm for strong portable PC demand in 2H07.

Terabyte growth associated with standalone storage systems or storage shipped with servers will grow at a 2007�2012 CAGR of more than 50%. Although SSDs will begin to be leveraged as a solution for input/output intensive applications, HDDs will continue to be the primary storage device used in these systems. Capacity-optimized HDDs designed for enterprise environments will increasingly be leveraged to provide the capacity needed for these systems.

HDD shipments for personal storage devices (aka external USB-attached hard disk drives) increased by more than 70% year on year. The personal storage market is the fastest growing market for HDDs and provides HDD OEMs with an opportunity to sell branded products directly to customers through retail or etail channels.

Overall, HDD shipments to computing markets posted 16% unit shipment growth in 2007. Note that IDC categorizes personal storage devices within compute markets. In contrast to the compute market, the consumer electronics market succumbed again to the vagaries of rapidly changing consumer and manufacturing OEM preferences as well as the continual evolution of devices where features and functionality are subsumed by a multipurpose device (e.g., PDA and mobile phone), moderating the need for discrete devices. As a result, HDD shipments for CE devices declined by 3% in 2007.

Although HDD shipments to CE markets generally remain volatile, HDD demand has grown steadily for some CE devices such as PVRs. Shipments of HDDs for stationary CE devices grew by 13% year on year, whereas HDD shipments for portable CE devices declined by 23%. CE manufacturers are increasingly using embedded NAND flash memory for data storage in portable devices. Correspondingly, shipments of 1.0in. HDDs were discontinued in 2007.

Computing markets, including personal storage devices, will continue to be a significant growth driver for the HDD industry.

©2008 IDC #212231 3

H a r d D i s k D r i v e A v e r a g e P r i c e - p e r - G i g a b y t e H i s t o r y

A rapid transition by the HDD industry to PMR technology in 2007 enabled a 33.5% year-over-year decline of the price per gigabyte of HDDs across all form factors, the highest rate of decline since 2002. Figure 1 shows the average HDD price per gigabyte for HDD storage from 1998 to 2007.

Looking ahead, we expect the price per gigabyte of HDD storage for 2007�2012 will decline at a CAGR of -21%.

F I G U R E 1

W o r l dw i d e A v e r a g e P r i c e p e r G i g a b y t e o f H D D S t o r a g e , 1 9 9 8 � 2 0 0 7

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Source: IDC, 2008

H a r d D i s k D r i v e I n d u s t r y S t r u c t u r e

Upon Cornice's and GS Magictor's exit from the industry in 2007 and 2006, respectively, only seven companies remain that design and manufacture hard disk drives. In addition to these seven companies, three companies assemble hard disk drives under contract manufacturing agreements with certain HDD OEMs. The three companies performing contract manufacturing for HDD OEMs are:

! SAE, a subsidiary of TDK. TDK's primary HDD-related business is the design and manufacturing of HDD read/write recording heads. TDK is the last remaining independent supplier of recording heads to the HDD industry.

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! Excelstor, a subsidiary of Great Wall Technology, which is a subsidiary of China Electronics Corporation, a $16 billion People's Republic of China (PRC) government-owned conglomerate.

! Union Technology Company (UTC), Thailand. UTC is a subsidiary of Saha-Union Public Company Limited.

Seagate completed its acquisition of Maxtor in 2006 and subsumed Maxtor's manufacturing operations into its global operations in 2007.

After several quarters of significant operating losses, Hitachi GST investigated selling a share of the company to private equity investors late in 2007. Early 2008, Hitachi announced it would proceed as an independent entity.

HDD OEMs discontinued production of 1.0in. HDDs in 2007, while Seagate and Hitachi GST also decided to discontinue new 1.8in. form factor HDD products. The entries by HDD OEMs into new HDD form factors in 2007 were Samsung's announcement of a 1.3in. HDD and Hitachi GST's entry into the 2.5in. enterprise-class segment. We anticipate Western Digital will enter the 2.5in. enterprise-class segment in 2008. Figure 2 provides a summary of HDD OEM participation in each HDD form factor and IDC's estimate of the size of each form factor in 2008 in terms of unit shipments and revenue.

In 2007, TDK/SAE acquired Alps Electric to make TDK/SAE the sole remaining independent supplier of HDD magnetic recording heads. TDK/SAE also acquired Magnecomp, a suspension assembly supplier. As a subsidiary of TDK, Magnecomp will continue to supply suspensions to non-TDK/SAE customers for an undetermined period of time, virtually leaving the industry with two independent suppliers � Hutchinson Technology and NHK Spring. One other suspension supplier, Suncall, produces comparatively smaller volumes of suspension assemblies only for Hitachi GST.

Western Digital acquired Komag, a producer of finished disk media and disk media substrates, in 2007. Subsequently, Western Digital will produce the vast majority of its own disk media, thus leaving the industry with three independent disk media suppliers.

While the number of HDD manufacturers did not change, there were significant changes to the supply base of key HDD components. In general, the HDD industry became more vertically integrated in 2007. Figures 3 and 4 show the HDD industry structure in 2006 and 2007, respectively.

Vertical integration does enable operational efficiencies. Vertically integrated companies often ramp new HDD technology to high volume slightly faster than nonvertically integrated HDD OEMs. Despite this operational advantage, a vertically integrated HDD OEM's overreliance on internally manufactured HDD components can limit access to HDD technology. Periodically, this can affect an HDD OEM's competitiveness to produce the highest capacity commercially available products, at least temporarily.

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F I G U R E 2

W o r l dw i d e E s t i m a t e d H D D I n du s t r y T A M , 2 0 0 8

0M

50M

100M

150M

200M

250M

300M

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$2B

$4B

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$14B

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$18B

Revenue Units

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Western Digital

Hitachi GST

Samsung

Fujitsu

Toshiba

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Units Revenue

Excelstor

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Revenue Units

Seagate

Western Digital

Hitachi GST

Samsung

Fujitsu

Toshiba

Fujitsu

Units Revenue

Excelstor

Source: IDC, 2008

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F I G U R E 3

W o r l dw i d e O w n e r s h i p b y H D D O E M s o f K e y H D D C o m po n e n t M an u f a c t u r i n g C a p a b i l i t i e s a n d R em a i n i n g I n d e p e n d en t S u p p l i e r s o f M a j o r H D D C o m po n en t s , 2 0 0 6

Source: IDC, 2008

©2008 IDC #212231 7

F I G U R E 4

W o r l dw i d e O w n e r s h i p b y H D D O E M s o f K e y H D D C o m po n e n t M an u f a c t u r i n g C a p a b i l i t i e s a n d R em a i n i n g I n d e p e n d en t S u p p l i e r s o f M a j o r H D D C o m po n en t s , 2 0 0 7

Source: IDC, 2008

The three largest HDD OEMs represent 75% of all HDD shipments in 2007 (see Table 1).

The three largest HDD OEMs in terms of unit market share also happen to be the most vertically integrated. One potential catalyst for further industry consolidation would be if the three largest HDD OEMs today collectively attained further market share gains. Additional industry consolidation could potentially create a tighter supply-demand balance for HDDs and serve to slow HDD average sales price (ASP) erosion.

Another potential catalyst for further industry consolidation would be additional HDD OEM participation in the 2.5in. enterprise-class HDD segment. A competitive response by one of the incumbents in this segment might be to acquire the new entrant to maintain a favorable supply/demand balance.

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T A B L E 1

W o r l dw i d e H D D S h i p m e n t s b y V en do r , 2 0 0 6 a n d 2 0 0 7 : A l l H D D F o r m F a c t o r s

2006 2007

Shipments

(M) Share (%)

Shipments (M)

Share (%)

2006�2007 Growth (%)

Change in Share

Seagate* 139,175 31.9 175,734 35.0 26.3 -1.6

Maxtor* 20,117 4.6 � � -100.0 NA

Western Digital 84,745 19.4 113,243 22.5 33.6 3.1

Hitachi 70,015 16.1 89,443 17.8 27.7 1.7

Samsung 47,654 10.9 47,816 9.5 0.3 -1.4

Toshiba 40,461 9.3 37,570 7.5 -7.1 -1.8

Fujitsu 29,820 6.8 35,918 7.1 20.5 0.3

Excelstor 2,821 0.6 2,752 0.5 -2.4 -0.1

Cornice 967 0.2 35 0.0 -96.4 -0.2

GS Magicstor 104 0.0 � � -100.0 0.0

Total 435,878 100.0 502,511 100.0 15.3

* Seagate includes Maxtor share in 2006.

Source: IDC, 2008

But given the degree of industry consolidation that has taken place over the past two years, we believe there will be a pause in mergers, acquisitions, or joint ventures and that major changes to the HDD industry structure are unlikely near term.

From a revenue perspective, the four largest HDD OEMs represent 84% of total HDD industry revenue (see Table 2). These four OEMs all compete in the two largest HDD form factor segments, desktop-class 3.5in. and mobile-class 2.5in.

With 5�6 HDD OEMs competing in the largest HDD segments, and with new entrants expected in the 2.5in. enterprise-class HDD segment in 2008, intense competitive pressures will persist. Also, managing industry supply in aggregate versus HDD demand will be an ongoing challenge. We note, however, that HDD OEMs were much more disciplined in adding manufacturing capacity in 2007 and managing supply to demand compared with prior years. Nevertheless, competitive dynamics will serve to keep downward pressure on HDD ASPs, at least near term.

©2008 IDC #212231 9

T A B L E 2

W o r l dw i d e H D D R e v en u e b y V e n do r , 2 0 0 6 a n d 2 0 0 7 : A l l H D D F o r m F a c t o r s

2006 2007

Revenue

($B) Share (%)

Revenue ($B)

Share (%)

2006�2007 Growth (%)

Change in Share

Seagate* 10.33 34.9 12.28 37.9 18.9 -1.7

Maxtor* 1.40 4.7 � � -100.0 NA

Western Digital 4.90 16.6 6.60 20.4 34.5 3.8

Hitachi 4.87 16.5 5.56 17.2 14.1 0.7

Samsung 2.53 8.5 2.84 8.8 12.6 0.2

Toshiba 2.77 9.3 2.34 7.2 -15.6 -2.1

Fujitsu 2.61 8.8 2.66 8.2 1.9 -0.6

Excelstor 0.12 0.4 0.11 0.3 -2.5 0.0

Cornice 0.06 0.2 0.00 0.0 -96.2 -0.2

GS Magicstor 0.01 0.0 � � -100.0 0.0

Total 29.59 100.0 32.39 100.0 9.5

* Seagate includes Maxtor share in 2006.

Source: IDC, 2008

F U T U R E O U T L O O K

F o r e c a s t a n d A s s u m p t i o n s

Assumptions

Table 3 lists the key assumptions used to generate the 2008�2012 forecast.

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T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Macroeconomics

Economy IDC assumes that worldwide economic growth will be challenged in 2008. In 2009, economic growth will be slightly lower worldwide as developed economies pick up growth but emerging economies drop. By 2010, economic growth worldwide should return to normal.

Moderate. A potential downside scenario for IT spending seems more likely, given the continued uncertainty over the U.S. housing market and potential declines in consumer spending. Economic strength is a key driver of mature technology markets. Nevertheless, essential hardware replacements coupled with the worldwide growth of digital information will fuel demand for storage devices despite overall economic growth.

↓↓↓↓ ###$$

Policy Compliance is still driving some IT spending, including Sarbanes Oxley, Basel II, and HIPAA. We believe any surge in demand for storage capacity for organizations to be compliant has passed, so we have lowered our certainty rating.

High. Compliance spending could crowd out other IT spending or, conversely, it could drive up spending. Compliance requirements are pushing higher enterprise storage requirements for companies and public organizations. The effect is strong demand for HDDs for storage systems.

↑↑↑↑ ###$$

Corporate profits IDC's assumption is for U.S. profit growth to come in at 1% in 2008 and 3% in 2009. This is a far cry from the 20%+ profit growth in 2006.

High. Company profits need to be high enough to fund information technology and communications (IT&C) initiatives. It appears that corporate profits will not be enough to fund all IT&C initiatives; new projects will require cost cutting, quick paybacks, and short implementation times.

↔↔↔↔ ###$$

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T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Hardware IT spending

Hardware markets defied gravity in 2007; however, growth is expected to fall to under 2% in the United States in 2008 � but will come in at over 5% worldwide. IDC assumes a five-year CAGR of 4.6% worldwide.

Moderate. Hardware spending will continue to be about 40% of total IT spending. Near term, there will be more downside than upside in the face of a slowing economy.

↑↑↑↑ ####$

Pervasive computing

This term refers to the proliferation of client devices and end-user or end-use devices at the network edge. By 2011, IDC expects five times as many non-PC devices to be connected to networks as PCs � including Internet-enabled cell phones, networked entertainment and gaming devices, automobiles, building automation systems, and industrial controllers. This doesn't even count RFID tags and sensors. IDC assumes that communicating client devices will proliferate at 5�10 times the rate of PCs installed.

High. Communicating client devices will depend upon vast content depots to deliver data to the edge of networks. Only hard disk drive technology is capable of economically providing random-access high-capacity storage. The effect is strong demand for HDDs for storage systems and content depots.

↑↑↑↑ ####$

Green IT This is a term referring to a basket of technologies and practices designed to minimize power costs, carbon output, and hazardous waste. The major impact of green IT will be seen in technology choices based on low power, more attention to asset disposal, and some change in vendor selection. Depending on the country, voluntary adherence to green IT principals could become law. For example, power and cooling expenses are growing four times as fast as new server spend and will move from half of the value of spending on new servers to nearly three-quarters by 2011.

High. The adoption of green IT products and practices should increase demand for new IT products, specifically HDDs that are proven to conserve power consumption without sacrificing performance.

↑↑↑↑ ####$

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T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Demographics The aging workforce in the developed world and the growth of the workforce in lower-cost geographies will affect both the supply of IT and the demand. These may be long-term trends, but they are already manifest in the globalization of the workforce and the slow IT market growth in places like Western Europe. IDC assumes that the center of ICT supply will migrate toward Asia and Eastern Europe and, in general, will diversify.

Low. The Asia/Pacific region is already the center of gravity for hard disk drive manufacturing. But IT hardware supply in general is increasingly at risk from potential political or economic disruptions. Likewise, HDD demand is also increasingly at risk as IT hardware consumption increasingly shifts to geographies outside the United States and Western Europe.

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HDD end-market trends and dynamics

Desktop PCs Unceasing competition from portables and falling replacements have dramatically reduced desktop growth. Although the market will receive a small boost from Vista and commercial replacements in 2008 will contribute to volume, we expect shipments to decline steadily throughout most of the forecast period.

High. New users, particularly price-sensitive users in emerging markets, will continue to favor desktops. Nevertheless, replacements from more experienced users will probably not support current volumes � even with lower prices, new designs, and a sustained performance advantage over portables impacting 3.5in. ATA demand.

↓↓↓↓ ####$

Commercial shift to portable PCs

The transition has been slowed slightly by cost concerns and uncertainty regarding security and the return on investment (ROI) of mobile computing. However, the transition will continue steadily and remain a key driver in system replacements.

High. Portable adoption is one of the most significant market drivers and adds to demand for 2.5in. HDDs.

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T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Consumer shift to portable PCs

Consumers continue to migrate rapidly to portable systems based on reduced cost and the appeal of mobility. A diminished performance penalty with desktops may not last in terms of raw horsepower but will remain important in the user experience.

High. Pricing trends, good-enough computing, and the benefits of wireless connectivity will continue to support the migration, further underpinning potential upside demand for mobile 2.5in. HDDs.

↑↑↑↑ ####$

Ultra-low-cost PCs New designs for ultra-low-cost computing may revolutionize information access and computing, particularly in low-income segments. However, these systems could fall well short of their goals, both technically and in volume adoption. These systems hold the potential for significant market change but need to demonstrate their success before projections for their demand are incorporated into our forecasts.

Low. We are assuming no impact from ultra-low-cost PCs such as the Eee PC until further evidence of their long-term success in the market. Nevertheless, should these designs eventually supplant traditional PCs it would have a negative impact on HDD demand, particularly mobile 2.5in. HDD demand.

↓↓↓↓ ###$$

Consumer electronics

Video content remains the primary demand driver for HDD adoption in CE devices. As such, HDD storage will be leveraged mainly for stationary as opposed to portable/handheld CE devices. Handhelds and other devices are likely to integrate with PCs, supporting PC growth. At the same time, connecting CE devices to PCs will push PC content growth higher. This will place upward pressure on HDD capacities for consumer PCs.

Moderate. The need for more storage capacity for consumers is likely. In the long run, multiple device options for storing consumer content will increase. As multiple devices compete for consumer attention and spending, ease of use and price will determine long-term successful CE products.

↑↑↑↑ ###$$

14 #212231 ©2008 IDC

T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Datacenter thermodynamics

Power wastage in the datacenter has a significant effect on overall "power capacity" (see Green IT assumption).

High. Power wastage comes from both underutilizing servers and over-provisioning of cooling; this is being addressed by virtualization to increase utilization implementation of datacenter best practices and dynamic cooling solutions. HDDs will increasingly be evaluated in terms of watts per gigabyte, watts per I/O, and watts per rack. The implication is to accelerate demand for small form factor (SFF) HDDs, and high-capacity (slower revolutions per minute) HDDs.

↑↑↑↑ #####

Virtualization and system management software

Virtualization will drive sales of new and more richly configured server systems.

High. Systems need components with faster speeds and more capacity to achieve the projected ROI benefits of virtualization from a consolidation and utilization standpoint. This will result in demand for servers with higher storage capacities, hence a higher attach rates of high-capacity HDDs.

↑↑↑↑ ####$

HDD technology, trends, and dynamics

HDD areal density growth

Perpendicular magnetic recording technology has put HDD areal density on a new technology "S" curve. Leading-edge HDD areal density will remain on a steep improvement slope through 2009. After 2009, areal density growth will require assist technologies for PMR to sustain a 20�30% year-over-year growth rate. Overall, we assume a 2007�2012 CAGR of 25�35% for HDD areal density (possibly higher for sub-2.5in. form factors).

High. Average HDD capacities will grow quickly near term to meet storage growth demand. Rapidly increasing mobile 2.5in. HDD capacities will minimize any perceived storage capacity penalties when deciding between a desktop or a portable PC. In the long run, slower areal density growth means HDD capacity points will elongate, resulting in slightly higher component per drive requirements for key HDD components.

↓↓↓↓ ###$$

©2008 IDC #212231 15

T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Incursion of capacity-optimized HDDs into enterprise storage

Capacity-optimized drives (mainly SATA today) have been proven reliable enough in storage arrays and will grow to more than 40% of the drives consumed in enterprise storage solutions in 2012.

High. The penetration of capacity-optimized drives into enterprise storage solutions will effectively replace 30�40% margin product with midteen margin product, hence reducing industry revenue potential and profitability.

↓↓↓↓ ####$

Serial SCSI interface adoption

Serial Attached SCSI (SAS) 3.0Gbps products have displaced parallel SCSI and achieved mainstream adoption. The storage ecosystem will migrate to SAS 6.0Gbps products beginning in 2009.

Moderate. The successful introduction of SAS 6.0 technology could encourage traditional Fibre Channel (FC) system customers to shift to SAS products. This in turn could result in new enterprise HDD demand.

↔↔↔↔ ###$$

Technology integration

HDD technology required to assist PMR will be costly and will be avoided by the HDD industry for as long as possible.

Moderate. New HDD technologies will be necessary to maintain 25�35% AD growth rate. The investment requirements for new technologies such as discrete track recording or bit patterned media (BPM) or heat-assisted magnetic recording may be cost prohibitive for many HDD segments, thus limiting the ROI opportunity.

↓↓↓↓ ###$$

Sub-1.8in. HDDs Aggressive NAND flash capacity advancements and pricing will place tremendous downward pressure on the market opportunity for sub-1.8in. HDDs

High. There is no demand for 1.0in. or smaller HDDs. The 1.3in. HDD form factor, just recently introduced, will succumb to competition from flash memory by 2010.

↓↓↓↓ #####

Capitalization

Components fabrication equipment

Significant investments will occur for component equipment to support new HDD technology and capacity requirements.

Moderate. The ROI will be challenging for component suppliers, given the rapid price erosion and the pressure to reduce bill of materials (BOM) costs.

↓↓↓↓ ####$

16 #212231 ©2008 IDC

T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Market characteristics

Degree of supplier concentration

The need to invest in PMR-assist technologies and the need to make investments for new manufacturing capacity will cause industry participants to again consider further consolidation.

Moderate. Strategic partnerships, joint ventures, and acquisitions are possible. The necessity to invest for new HDD technology and to manage industry capacity growth may be a catalyst for further industry consolidation.

↑↑↑↑ #$$$$

New enterprise-class HDD suppliers

One new supplier will enter the 2.5in. enterprise-class HDD segment in 2008. Additional suppliers are considering entering this segment.

Moderate. Additional suppliers to HDD segments are expected as market opportunities increase. However, additional vendors in the 2.5in. enterprise-class HDD segment may be a catalyst for further industry consolidation.

↔↔↔↔ ###$$

Component supply IDC does not foresee significant component constraints through 2012.

High. Without a "governor" to prevent excess HDD production, the likelihood for overproduction and rapid price erosion increases.

↔↔↔↔ ####$

Market ecosystem

Enterprise solutions

Terabyte shipments by enterprise storage solutions (servers, storage systems, and workstations) will grow at a 2007�2012 CAGR of more than 50%.

Low. Increased usage of capacity-optimized HDDs will absorb a growing proportion of this terabyte growth. ↓↓↓↓ ###$$

Desktop PC growth Desktop PC shipments will grow at a 2007�2012 CAGR of approximately 6.5%, up from prior estimates of a 5% CAGR.

Low. The tie ratio of desktop-class HDDs to desktop PCs is about 1.45 (currently) but will erode as the percentage of HDD shipments drops.

↑↑↑↑ ####$

Portable PC growth Portable PC shipments will grow at a 2007�2012 CAGR of approximately 25%.

Low. The tie ratio of mobile-class HDDs to laptop PCs is about 1.15 (currently). Growth in the whitebook market will push the tie ratio higher.

↑↑↑↑ ####$

©2008 IDC #212231 17

T A B L E 3

K e y F o r e c a s t A s s u m p t i o n s f o r t h e W o r l dw i d e H a r d D i s k D r i v e M a r k e t , 2 0 0 8 � 2 0 1 2

Market Force IDC Assumption Impact

Accelerator/ Inhibitor/ Neutral

Certainty of Assumption

Game consoles Future generations of gaming consoles will include a mixture of units with the HDD as a standard component, whereas some will offer the HDD as an add-on option.

High. Users recognize the value of adding HDD storage to game consoles. HDD demand for gaming markets will grow. ↑↑↑↑ ###$$

PVRs Cable/satellite companies will continue to deploy digital video recorder (DVR) enabled set-top boxes (STBs) that rely on HDD storage

Moderate. Consumer adoption is expected to accelerate. Network DVR bears monitoring. ↔↔↔↔ ####$

Legend: #$$$$ very low, ##$$$ low, ###$$ moderate, ####$ high, ##### very high

Source: IDC, 2008

Worldwide Hard Disk Drive Forecast

Worldwide HDD shipments are projected to rise by 13.0% in 2008, at a 9.2% 2007�2012 CAGR. Worldwide HDD shipments will likely exceed 750 million units by 2012 (see Table 4). Unit shipments of enterprise storage, server, personal storage devices, and personal video recorders will comprise nearly 50% of total HDD unit shipments by 2012, up from 35% of total HDD shipments in 2007.

Although HDD industry revenue is expected to grow at only a 6.7% 2007�2012 CAGR, it is growing from a large base. HDD industry revenue was $30 billion in 2006 and will increase by roughly 50% in six years to approach $45 billion by 2012 (see Table 5).

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T A B L E 4

W o r l dw i d e H D D S h i p m e n t s b y M a j o r A p p l i c a t i o n , 2 0 0 4 � 2 0 1 2 ( 0 0 0 )

2004 2005 2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

Storage systems

17,086 19,781 23,034 30,026 33,870 37,363 43,954 56,465 72,508 19.3

Entry servers

8,260 11,336 12,382 11,479 11,948 12,045 12,382 12,803 13,035 2.6

Traditional workstations

357 350 451 727 922 1,050 1,251 1,468 1,750 19.2

Desktop PCs

182,449 198,513 203,783 212,908 215,003 214,958 212,866 214,859 210,277 -0.2

Personal storage (DAS and NAS)

6,131 16,227 25,397 43,602 62,173 84,304 107,128 126,916 141,632 26.6

Portable PCs

51,044 76,114 96,921 131,809 161,170 191,210 210,456 215,233 228,289 11.6

Consumer electronics

40,629 58,416 73,910 71,960 82,546 90,730 100,781 106,178 112,088 9.3

Total 305,955 380,736 435,878 502,511 567,633 631,660 688,818 733,924 779,579 9.2

Note: See Table 3 for key forecast assumptions.

Source: IDC, 2008

©2008 IDC #212231 19

T A B L E 5

W o r l dw i d e H D D R e v en u e b y M a j o r A p p l i c a t i o n , 2 0 0 4 � 2 0 1 2 ( $ M )

2004 2005 2006 2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Storage systems

3,070 3,960 4,303 5,156 5,499 5,344 5,606 6,387 7,368 7.4

Entry servers 1,174 1,581 1,446 1,154 1,207 1,086 1,101 1,079 1,084 -1.3

Traditional workstations

39 33 39 50 54 56 70 85 104 16.0

Desktop PCs 10,969 11,546 11,027 10,855 10,457 10,452 10,195 10,119 9,617 -2.4

Personal storage (DAS and NAS)

446 1,333 2,080 3,458 4,443 5,870 6,911 8,199 9,798 23.2

Portable PCs 4,589 5,583 6,498 7,963 9,217 10,212 11,067 11,424 11,790 8.2

Consumer electronics

2,710 3,728 4,203 3,756 4,196 4,432 4,645 4,786 4,990 5.8

Total 22,996 27,765 29,595 32,391 35,072 37,454 39,594 42,079 44,751 6.7

Note: See Table 3 for key forecast assumptions.

Source: IDC, 2008

IDC's forecast for HDD industry revenue growth could prove to be conservative should HDD OEMs successfully develop and market new HDDs with additional features and functionality for which they capture incremental value. Value-add opportunities for HDDs include:

! HDD hardware-embedded data encryption

! Hybrid storage technology solutions that improve HDD performance at a lower cost than full SSD solutions

! HDDs that reduce power consumption

! Form factors and/or design features tailored to specific applications � with the caveat that subsequent shipment volumes provide an ROI for the program development

20 #212231 ©2008 IDC

IDC's HDD revenue forecast comprises a mix of HDDs with features that capture an associated price premium and standard HDDs. Historically, HDDs that ship with value-add features are able to extract a price premium for several quarters at least. We assume market and competitive dynamics in the future will exert price pressure on many value-added features that eventually result in the features becoming standard for a given disk drive. However, some HDD features that might result in higher HDD bill of materials costs could result in a reset of ASPs for HDDs with these capabilities. Hybrid HDD storage solutions provide a salient example where combining nonvolatile flash semiconductor storage with an HDD and using intelligence on the HDD to improve HDD and/or the host device performance might boost BOM costs markedly. In this example, it is likely that HDD OEMs would extract value for this capability with a price premium over standard HDDs for a prolonged period of time. This forecast iteration reflects only a small percentage of hybrid HDD solutions in future years. More research is underway to better understand the capability of hybrid HDD solutions compared with other storage solutions. IDC's HDD revenue forecast will be adjusted accordingly should hybrid HDD adoption assumptions be revised.

When viewed from the perspective of terabytes shipped, a comparison of IDC's 2007 and 2008 HDD forecasts shows that annual HDD terabyte shipments are significantly higher in this forecast iteration. By 2012, the HDD industry will ship nearly 400 million terabytes, more than quadruple the 85 million terabytes shipped in 2007, to meet the growing storage requirements of an expanding digital world.

Risks to Forecast

The biggest risk to HDD industry shipment and revenue growth comes from near-term uncertainty over the prospects of the economies of key countries, especially the United States. Macroeconomic trends in the United States are strongly correlated to IT spending. A U.S. recession could impact IT spending negatively for an indeterminate period of time, although the impact to IT spending, specifically on IT hardware, is less clear. The depth and duration of slower economic growth in the United States will likely be a key factor as to whether economies in other regions are impacted negatively.

A U.S. recession in 2008 would be different when compared with recent U.S. recessions. In recent recessions, U.S. homeowners were able to tap mortgage equity withdrawals as a source of cash to prolong discretionary consumer spending. Given that homeowners will be unable to tap mortgage equity in the present economic environment, a contraction of U.S. discretionary consumer spending is likely. Although more than 85% of worldwide HDD unit shipments and revenue are derived from traditional compute markets, consumers do purchase a high percentage of compute devices annually, including PCs and personal storage devices. The U.S. Congress has taken measures to stimulate the U.S. economy with tax rebates. Nevertheless, any slowing of discretionary consumer spending could have an adverse impact on HDD demand for these markets, at least near term.

To a degree we believe storage growth, hence HDD demand, is somewhat mitigated due to a weak macroeconomic environment. The cost of HDD storage on a price-per-gigabyte basis continues to decline. As HDD storage becomes cheaper on a price-per-gigabyte basis, it enables digital information to be captured and stored

©2008 IDC #212231 21

inexpensively and easily. This in turn results in faster content growth. This content creation and storage cycle is likely to persist in the face of a challenging economic spending environment. Further, from an acquisition cost perspective, the average price of hard disk drives continues to decline while capacities are increasing.

Of equal importance to the potential economic impacts on the HDD forecast is recognizing the potential for the capacity requirements of certain devices to be satisfied using storage technologies other than HDDs, particularly portable PCs in certain usage scenarios. In 2007, Asustek introduced the Eee PC, an ultraportable PC with 4GB or 8GB of flash memory SSD storage. Asustek plans to sell 5 million Eee PCs in 2008, with some models providing up to 20GB of SSD storage capacity. The Asustek Eee PC provides an example where flash memory may provide good-enough storage capacity for a mobile computing product. However, another point to consider is that a certain percentage of mobile PCs, such as the Asustek Eee PC, could be additive to the overall market, rather than a replacement purchase for a traditional HDD-based mobile PC. IDC has accounted for devices such as the Eee PC in its PC forecast assumptions and expects a relatively minimal impact of these products on HDD shipments and revenue through 2012.

Several overarching assumptions specific to the hard disk drive industry underpin this 2007�2012 HDD forecast (for additional assumptions, refer back to the Assumptions section).

Hard Disk Dr ive Technology

Ongoing research and development of HDD technology continues to enable new HDD products with higher capacities and lower prices on a price-per-gigabyte basis. HDDs also continue to deliver improved performance, better reliability, and richer features. Advancement of HDD technology is the primary reason why the HDD industry has been able to shrug off the challenge from competing storage technologies for 50 years.

Perpendicular magnetic recording technology, first introduced on commercial HDD products in 2005, is the latest HDD technology to make possible sustained areal density advancements. Areal density increases allow for more data to be stored on each disk, resulting in higher-capacity HDDs. PMR technology can also enable HDD OEMs to ship a given drive with fewer components, although this dynamic has lessened in recent years. PMR technology will enable areal density advancements of approximately 40% per year through 2010. An improvement rate of 40% annually is good, but it is less than the 100% annual areal density increases made possible by the industry transition from magneto resistive (MR) to giant magneto resistive (GMR) technology from 1998 to 2002. The speed for the HDD industry to transition from GMR to PMR technology is about the same pace as the industry transition from MR and thin film to GMR technology (see Figure 5).

We do not foresee any new HDD technologies in development now that will facilitate HDD areal density growth rates greater than 40% per year. Conversely, after 2010 we expect leading-edge HDD areal density growth rates will likely slow to less than 40% per year. Figure 6 shows historical leading-edge HDD areal density products from 1998 to 2007 and IDC's assumptions for the highest commercialized areal density HDD products through 2012.

22 #212231 ©2008 IDC

F I G U R E 5

W o r l dw i d e PM R a n d G M R H D D S h i p m en t s S h a r e o f T o t a l H D D S h i p m en t s b y Y e a r A f t e r T e c h n o l o g y I n t r o d u c t i o n

0102030405060708090

100

Year 1 Year 2 Year 3 Year 4

(%)

GMRPMR

Source: IDC, 2008

F I G U R E 6

W o r l dw i d e C o m m e r c i a l i z e d H D D L e a d i n g E d ge A r e a l D en s i t y , 1 9 9 8 � 2 0 0 7

0

50

100

150

200

250

300

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

(Gbi

ts/in

.2 )

Source: IDC, 2008

©2008 IDC #212231 23

Several assist technologies will need to be used in conjunction with PMR technology to realize HDD areal density growth beyond approximately 2010, and these are being developed now. Owing to the cost to develop and deploy new HDD technologies, we assume they will be avoided by HDD OEMs for as long as possible. Further, these assist technologies will be employed first in HDD segments with the highest capacity demands. As such, IDC's assumptions for areal density advancements vary by HDD segment. Generally, we believe that mobile 1.8in. and mobile 2.5in. HDDs will adopt PMR-assist technology first.

One example of an assist technology to PMR is dual-stage actuation (DSA, aka second-stage actuation). Prior to the launch of PMR technology in 2005, DSA was used on two HDD programs to extend longitudinal magnetic recording. Volume production of both HDD programs that had used DSA technology were discontinued in 2007. One of these programs used a load-beam-based DSA solution, while the other used a co-located DSA approach. Although DSA is not presently used in high-volume HDD programs, it is being investigated again as a solution on future HDD programs.

The BOM cost adder for DSA technology is high. With DSA, there is a cost adder for every read/write head used in the disk drive. IDC expects most HDD OEMs will seek to design around DSA solutions for as long as possible.

There are other HDD technologies that have a lower additional BOM cost per drive that may be adopted before 2012, but only for market segments that value the additional capacity provided by the technology. Examples include discrete track recording and/or bit patterned media. We expect commercial HDD products using these technologies will be possible by 2010.

Hard Disk Dr ive ASP Erosion

From 2002 to 2006, blended average HDD prices declined year on year by an average of about 8%. Year-on-year average HDD price erosion in 2007 was 5%. The slower rate of price erosion was achieved by a mix shift of HDD shipments to higher capacities and to smaller HDD form factors. These same market dynamics will intensify during the period from 2007 to 2012, and they will help to maintain a slower average rate of HDD price erosion across all form factors.

Competing Storage Technologies to Hard Disk Dr ives

NAND flash memory bit price erosion of 40�60% per year has made possible displacement of virtually all small form factor HDDs that were once used in handheld devices.

Flash chips are not only displacing SFF HDDs in handheld devices but are also enabling the emergence of lower-cost solid state drives that will compete with traditional HDDs in applications with low-capacity requirements. A modest reduction of HDD demand for portable PCs in the later portion of the forecast period is assumed.

24 #212231 ©2008 IDC

To a lesser degree (in terms of unit volume), SSDs will make an incursion into traditional enterprise HDD markets. Certain compute applications that have intensive input/output workloads may be better served by SSDs. SSDs have no moving parts, whereas reading and writing data within HDDs requires positioning the read/write head over a spinning disk. The inherent mechanical design of an HDD results in some latency for reading and writing data. With an SSD, read latency is significantly reduced, although write times in current SSD designs often take longer than HDDs. The impact of SSDs in enterprise storage applications has been factored into this HDD forecast. It should also be noted that SSDs within the enterprise could be additive terabytes, as opposed to displacing traditional HDD terabytes. As such, we believe NAND flash�based SSDs could also encroach on DRAM-based SSDs leveraged in many of today's enterprise systems.

IDC continues to monitor several other nonvolatile storage technologies and does not foresee development of any new storage technologies within the forecast period that will threaten the market opportunity for HDDs.

Alternatively, HDD storage has the potential to displace magnetic tape in certain storage usage models. This forecast does account for a relatively new application for HDDs, removable hard disk drives (R-HDDs). R-HDDs are designed to replace magnetic tape cartridges for data backup but not necessarily for data archiving.

Although data archiving is not normally associated with HDD storage, industry participants are investigating HDD solutions that could provide a rotating magnetic disk alternative to magnetic tape. The use of HDD storage instead of magnetic tape for data archival could impact midline HDD storage demand negatively but increase overall HDD demand positively. This forecast does not assume any significant or deliberate incursion of HDD storage into traditional magnetic tape archival storage markets.

HDD Market Overview

The sections that follow review IDC's HDD market forecast by major HDD markets or consumption categories and by HDD form factor.

Enterpr ise Appl icat ions � Small and Speedy or Supers ized?

The enterprise market is increasingly bifurcated between using capacity-optimized (mainly ATA interface) and performance-optimized (SCSI/SAS/FC interface) HDDs. Exceptions are beginning to surface where capacity-optimized HDDs are used to achieve a high-performance storage solution. But solutions like this are unlikely to be adopted broadly to an extent where there is a major displacement of performance-oriented HDDs by capacity-optimized HDDs in storage systems.

Nevertheless, greater use of capacity-optimized drives in enterprise storage applications does impact the demand for enterprise-class HDDs and is reflected in IDC's forecast.

The majority of capacity-optimized HDD shipments through 2007 were 3.5in. form factor products. IDC expects the HDD industry will introduce a 2.5in. form factor capacity-optimized HDD in 2008, with three disks that are more tailored to rackmount

©2008 IDC #212231 25

environments. Although 3.5in. capacity-optimized HDDs for enterprise applications will generally have two times the capacity of 2.5in. HDD products, the smaller 2.5in. capacity-optimized HDDs will consume less power and space. This means it will also take less power to cool the entire storage system or datacenter and that you can pack more HDD units into the same amount of space. We expect qualification of 2.5in. capacity-optimized HDDs tailored for rackmount environments will commence in 2009, with expanded adoption by storage systems customers in 2010.

The addition of new form factor HDDs for enterprise markets combined with a greater variety of spin speeds and interfaces has served to reduce year-on-year price-per-gigabyte erosion for performance-optimized enterprise-class HDDs. Table 6 shows the year-on-year decline of the price per gigabyte for all enterprise-class HDDs. Note the slowdown of price erosion since 2005.

Small form factor 2.5in. performance-optimized HDD shipments increased sharply in 2007 and will surpass 3.5in. performance-optimized HDD shipments by 2010.

Given that the demand for additional storage capacity by organizations (above a 50% CAGR) exceeds the average capacity increase of HDDs (40%), HDD shipments to enterprise applications will accelerate. IDC's forecast for HDD shipments to enterprise applications by form factor is provided in Table 7.

T A B L E 6

W o r l dw i d e E n t e r p r i s e - C l a s s H D D P r i c e p e r G i g a b y t e , 1 9 9 8 � 2 0 0 7

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Price per gigabyte ($)

57.66 32.88 16.08 9.92 6.13 3.81 2.38 1.85 1.44 1.16

Growth (%) -42.4 -43.0 -51.1 -38.3 -38.2 -37.9 -37.6 -22.0 -22.1 -19.7

Source: IDC, 2008

26 #212231 ©2008 IDC

T A B L E 7

W o r l dw i d e H D D S h i p m e n t s f o r E n t e r p r i s e A pp l i c a t i o n s b y H D D F o r m F a c t o r , 2 0 0 7 � 2 0 1 2 ( 0 0 0 )

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Performance-optimized 3.5in. (SCSI/SAS/FC) HDDs

21,232 20,006 16,997 13,958 11,163 8,948 -15.9

Performance-optimized 2.5in. (SAS/FC) HDDs

8,701 12,298 16,153 21,371 29,416 36,040 32.9

Capacity-optimized 3.5in. (SATA/SAS/FC) HDDs

10,758 13,063 14,920 18,149 23,545 31,104 23.7

Capacity-optimized 2.5in. (SATA/SAS/FC) HDDs

1,542 1,374 2,389 4,109 6,613 11,201 48.7

Total 42,232 46,741 50,458 57,587 70,737 87,293 15.6

Note: See Table 3 for key forecast assumptions.

Source: IDC, 2008

PC Market � The Shif t to Mobi l i ty and the Implicat ion for HDDs

Personal computers remain the largest driver for HDD demand, accounting for more than 60% of HDD unit shipments in 2007. From a revenue perspective, the PC market contributed more than 50% of HDD industry revenue in 2007. The PC market will continue to be an important market for the HDD industry through 2012, but revenue from this market will only grow at a 2007�2012 CAGR of 2.6% (see Table 8). As a result, the share of contribution of PC HDD revenue to overall HDD industry revenue will decline. By 2012, less than 50% of HDD industry revenue will be derived from both portable and desktop PC vendors. In spite of this decline, it will continue to be the largest single market for HDDs.

Portable PCs remain a key driver of growth for the PC industry. Portable PC shipments are expected to exceed desktop PC shipments for the first time in 2009. As opposed to becoming more homogenous, portable PCs are morphing into a variety of form factors, and users increasingly are buying portable PCs for entertainment or industrial purposes.

Adoption of 1.8in. HDDs in portable PCs has been limited to only a few product SKUs. Widespread adoption of 1.8in. HDDs in portable PCs has been held back by the same factors that inhibit 2.5in. HDD adoption in desktop PCs: There is a price penalty to obtain an identical capacity point HDD product, albeit in a smaller form factor. Notwithstanding these inhibitors, 1.8in. HDDs do enable a smaller and lighter portable PC. We expect PC buyers will place greater value on this purchase criterion

©2008 IDC #212231 27

in future years. In the meantime, 1.8in. HDDs for PC applications are possible with capacities of up to 250GB in 2009 and 500GB by 2011. We believe the combination of these factors could lead to steadily increasing shipments of 1.8in. form factor HDDs for portable PCs throughout the forecast (see Table 9), with a caveat that ongoing price pressure in PC markets could slow 1.8in. HDD adoption.

T A B L E 8

W o r l dw i d e H D D S h i p m e n t s a n d R e v en u e f o r P C A p p l i c a t i o n s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000) 344,717 376,173 406,168 423,322 430,093 438,566 4.9

Revenue ($M) 18,817 19,674 20,664 21,262 21,543 21,407 2.6

Notes: Shipment and revenue data includes comparatively small non-PC market device applications. See Table 3 for key forecast assumptions.

Source: IDC, 2008

T A B L E 9

W o r l dw i d e H D D S h i p m e n t s f o r P o r t a b l e P C s b y H D D F o r m F a c t o r , 2 0 0 7 � 2 0 1 2 ( 0 0 0 )

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Mobile 2.5in. 130,118 157,459 184,808 199,293 198,376 211,509 10.2

Mobile 1.8in. 1,692 3,711 6,402 11,162 16,858 16,780 58.2

Total 131,809 161,170 191,210 210,456 215,233 228,289 11.6

Notes: Shipment data includes comparatively small non-PC market device applications. Includes estimated annual HDD shipments for PC upgrades. See Table 3 for key forecast assumptions.

Source: IDC, 2008

28 #212231 ©2008 IDC

Concurrent with the trend toward mobility is the increasing risk of lost or stolen data. Embedded disk drive encryption technology, including encrypted keys stored on the disk drive, is likely to ship on a higher percentage of mobile 2.5in. HDDs over the next several years.

PC OEMs are also seeking to improve the performance of portable PCs. SSD-based PCs to date have failed to demonstrate enough of a noticeable boost in PC performance to justify the enormous price premiums. The majority of mobile 2.5in. HDDs used in portable PCs today have 5,400rpm spin speeds. Buyers can upgrade to a 7,200rpm HDD at the time of purchasing the PC. The challenge for HDD OEMs is to deliver improved performance with a 7,200rpm spin speed HDD without increasing power consumption. IDC expects that 7,200rpm mobile HDDs will compose approximately 8% of mobile 2.5in. HDD shipments to compute markets in 2008, up from 5% in 2007.

Price and capacity will continue to be the most important considerations for HDD purchases for desktop PC manufacturers. But increasingly, the desire for smaller, cooler, and quieter-operating PCs could result in greater adoption of small form factor HDDs designed for small spaces. Mobile 2.5in. HDDs have been designed into a limited number of desktop PC SKUs, mainly PC blades or all-in-one designs where the motherboard and LCD monitor are integrated as one component. Throughout the forecast period, there will continue to be a price penalty for PC manufacturers to migrate from a 3.5in. HDD to an identical capacity 2.5in. HDD.

Conversely, there is a capacity penalty when buying a mobile 2.5in. HDD at the same price as desktop-class 3.5in. HDD. It is possible that commercial PC buyers might seek to limit the capacity available on a desktop PC. A mobile 2.5in. HDD as opposed to a desktop-class 3.5in. HDD is a means to this end. However, from an HDD OEM perspective this would be a low-margin and unattractive market.

Another factor that has held back adoption of mobile 2.5in. HDDs in desktop PCs is performance. Mainstream mobile 2.5in. HDDs spin at a 5,400rpm spin speed, whereas mainstream desktop-class HDDs spin at a 7,200rpm spin speed. Presently, 7,200rpm mobile 2.5in. HDDs are available, but at a price premium over equivalent capacity 5,400rpm products. For PC OEMs, the 7,200rpm HDD is an upsell opportunity, and one that IDC expects PC OEMs (and certain HDD OEMs) will want to maintain as long as possible. For these reasons, we do not foresee a transition of mobile 2.5in. to 7,200rpm as mainstream. This dynamic will serve as an inhibitor for mobile 2.5in. HDD incursion into desktop PC markets.

There is one wild card that could be a potential catalyst for mobile 2.5in. HDD adoption in desktop PCs: regional regulations that prescribe limits to overall PC power consumption. Even without regulations, voluntary compliance with green standards could act as a market driver. We are aware that such regulations have been discussed, but they are not imminent. Therefore, we assume increased usage of mobile 2.5in. HDDs in desktop PCs will be driven mainly by transitions to certain desktop PC form factors as opposed to other factors (see Table 10).

©2008 IDC #212231 29

T A B L E 1 0

W o r l dw i d e H D D S h i p m e n t s f o r D e s k t o p PC s b y H D D F o r m F a c t o r , 2 0 0 7 � 2 0 1 2 ( 0 0 0 )

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Desktop-class 3.5in. 211,122 210,099 203,287 191,678 183,767 176,548 -3.5

Mobile 2.5in. 1,786 4,904 11,671 21,188 31,092 33,729 80.0

Total 212,908 215,003 214,958 212,866 214,859 210,277 -0.2

Notes: Shipment data includes comparatively small non-PC market device applications. Includes estimated annual HDD shipments for PC upgrades. Incursion of mobile 2.5in. HDDs into the desktop market is assumed to be at lower-capacity points and will utilize primarily 1-disk, 1-head HDD configurations. See Table 3 for key forecast assumptions.

Source: IDC, 2008

Personal Storage � The 2007�2012 HDD Growth Engine

The personal storage market continues to grow rapidly. Personal storage devices are one of the few product categories that incorporate nearly every HDD form factor, except for performance-optimized enterprise-class form factors. The personal storage market also creates an interesting sales channel for HDD OEMs. Because the responsibility for the quality of new HDDs for personal storage products lies solely with the HDD OEMs, lengthy customer qualification cycles can be avoided. This gives HDD OEMs the option to ramp production of new, higher-capacity HDDs quickly.

Underpinning IDC's optimism for growth of the personal storage device market is the relatively low percentage of homes and small businesses/small offices worldwide with both a PC and a personal storage device (see Figure 7). We believe consumers are finally realizing the need for personal data protection.

30 #212231 ©2008 IDC

F I G U R E 7

W o r l dw i d e P e r s o n a l S t o r a g e D e v i c e I n s t a l l e d B a s e S h a r e o f H o m e an d S m a l l B u s i n e s s / S m a l l O f f i c e PC I n s t a l l e d B a s e , Y e a r s

05

1015202530354045

2007 2008 2009 2010 2011 2012

(%)

Source: IDC, 2008

But personal data protection is only one driver of higher personal storage device unit demand. Consumers increasingly are also using personal storage devices simply to store more digital media and data. For example, Western Digital announced in 2007 a personal storage product designed to attach to a TiVo PVR via an external SATA (eSATA) interface. IDC expects steady growth of personal storage unit shipments for these use cases and applications. We also expect personal storage devices used to store digital media are likely to have very high storage capacities, given the expected growth of high-definition video content.

The number of terabytes shipped with personal storage devices exceeded the number of terabytes shipped to enterprise applications in 2006. By 2010, annual personal storage terabyte shipments will reach nearly two times the terabyte shipments into enterprise storage applications.

Going forward, IDC expects the market for personal storage devices will include a higher percentage of multiple-HDD configurations. IDC's HDD forecast reflects this trend with a 2007�2012 CAGR of 27% for HDDs shipping to the personal storage market (see Table 11).

©2008 IDC #212231 31

T A B L E 1 1

W o r l dw i d e H D D S h i p m e n t s f o r P e r s o n a l S t o r a g e D e v i c e s b y H D D F o r m F a c t o r , 2 0 0 7 � 2 0 1 2 ( 0 0 0 )

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Mobile 1.xin. 727 721 813 1,050 1,200 2,000 22.4

Mobile 2.5in. 10,503 21,190 37,802 58,525 77,589 91,880 54.3

Desktop-class 3.5in. 32,373 40,262 45,689 47,553 48,127 47,752 8.1

Total 43,602 62,173 84,304 107,128 126,916 141,632 26.6

Note: See Table 3 for key forecast assumptions.

Source: IDC, 2008

Consumer E lectronics Products � Al l About Video

Digital video recorder/personal video recorder devices remain a strong demand category for HDDs. The PVR market subsegments include standalone devices such as the well-known TiVo box and set-top boxes supplied by cable and satellite providers. A relatively new category for PVR storage is download-and-burn devices. These devices enable downloading movies to the PVR, where it is cached for a fixed period of time for users to view. But it also allows consumers to burn the downloaded movie to a DVD for an additional fee. Standalone download-and-burn devices will compete against PCs equipped with DVD writers and users that "sneakernet" the DVD to a DVD player. Hence, we believe the PC will likely win the battle against download-and-burn devices.

The living room is reaching an inflection point where many potential storage solutions could exist to cache or store video content for consumers. At the same time, the number of paths for digital video to reach the living room are increasing with satellite, cable, and Internet Protocol television (IPTV) service providers all providing options to access video content in addition to traditional terrestrial broadcast signals. Higher-capacity PVRs are one potential scenario. Another is for personal storage devices to be attached to PCs to hold many hours of IPTV content.

Another wildcard is for game console manufacturers to integrate IPTV capabilities into game consoles.

Longer term, IDC is watching the advancements of streaming and time-shifting video content at the head end in the service provider's facility. The concept of a network DVR is technically an option to caching content locally in the home, but is inhibited mainly by copyright and quality of service issues. Near term, local caching onto a hard drive is likely to remain a standard practice to avoid legal entanglements and to ensure an acceptable quality of service level. Long term, as broadband continues to become more pervasive and reliable, the ability to watch live video streams from the

32 #212231 ©2008 IDC

head end (as opposed to locally stored content) increases. If copyright issues can be eliminated, the long-term reality could be televisions with HDD cache integrated into the actual television set, as opposed to having a discrete STB. This way, <pause>, <rewind>, and <fast forward> become functions of the TV remote control. This scenario would serve to reduce local storage requirements, but it could increase unit demand for HDDs to be embedded in the display. Moreover, given the requirement to keep TVs cool and quiet, embedding the HDD in the TV display could boost demand for either mobile 2.5in. HDDs or desktop-class 3.5in. HDDs that spin slower, use less power, and generate less heat.

Approximately 80% of HDDs shipping to the PVR/DVR market today are 1-disk, 3.5in. ATA products. STB manufacturers seek to minimize BOM costs while providing as much capacity available from a 1-disk solution. Even with growing penetration of HDTV in households worldwide, IDC expects 1-disk HDDs will continue to make up nearly 80% of HDDs shipping to PVR markets. Table 12 provides the 2007�2012 forecast for HDD shipments to PVR applications by HDD form factor. Note that IDC does not include HDD shipments for video surveillance applications in its forecast for HDD shipments to PVR applications.

T A B L E 1 2

W o r l dw i d e H D D S h i p m e n t s f o r C o n su m e r E l e c t r o n i c s A p p l i c a t i o n s , 2 0 0 7 � 2 0 1 2 ( 0 0 0 )

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Set-top box/PVR/DTV 32,052 39,022 44,374 52,178 57,356 61,959 14.1

Mobile phones/PDAs/SHDs 71 � � � � � NA

Game consoles/HHs games

15,663 20,554 23,425 27,448 31,729 32,090 15.4

Auto/Nav/PND 4,301 4,811 6,004 7,433 9,178 10,100 18.6

Digital cameras/ camcorders

3,137 5,356 6,068 6,564 6,527 5,933 13.6

Digital audio/PMPs 16,736 12,803 10,858 7,158 2,348 2,006 -34.6

Total 71,960 82,546 90,730 100,781 107,138 112,088 9.3

Note: See Table 3 for key forecast assumptions.

Source: IDC, 2008

©2008 IDC #212231 33

Game consoles will continue to drive solid HDD demand, primarily for mobile 2.5in. HDDs. Microsoft offers a HDD with certain Xbox 360 SKUs and as an add-on option, while Sony incorporates an HDD in 100% of its PS3 consoles.

Higher-capacity HDDs are expected to be attached to game consoles in future years, especially if game console manufacturers begin to include IPTV functionality in future generations of game consoles.

Increasingly, automobiles will have in-dash infotainment systems that provide audio, video, and navigation information to passengers. Several automotive OEMs now offer factory-installed HDD-based navigation or infotainment systems, but these systems typically are available only in high-end model vehicles; thus, the overall volume to automotive OEMs is relatively low.

The majority of HDDs shipped for automotive applications are mobile 2.5in. HDDs. A growing percentage of the HDDs shipping for automotive applications are ruggedized to meet demanding temperature, humidity, and vibration requirements.

There is a strong potential for SSD adoption in the automotive market in future years, as a substitute for HDDs, especially as prices for SSDs fall. SSDs are well suited for automotive market requirements for several reasons. SSDs can withstand a much wider temperature and humidity range than HDDs and are more resistant to shock and vibration. By 2010, SSDs will be available at lower, but sufficient, capacity points for most automotive storage requirements. Further, like most other automobile components, SSD prices for a given capacity point can fall over long periods of time. In comparison, HDD vendors transition to higher capacity-per-platter products that provide more capacity at about the same ASP over time.

IDC believes SSD adoption in automotive systems will curtail HDD usage in automotive applications, and this is reflected in IDC's outlook.

Somewhat surprisingly, Samsung introduced a 1.3in. HDD in 2007 for portable CE devices. Volume production of 1.3in. form factor HDDs will depend heavily on adoption by a few key customers. IDC expects the 1.3in. form factor HDD will provide a slight price-per-gigabyte advantage for a few years, but not after 2011. Accordingly, IDC is forecasting relatively low volumes for 1.3in. HDD shipments and ceasing in 2011 as this form factor succumbs to attractive flash memory pricing by that time.

IDC's forecast for HDD revenue for CE devices and applications is provided in Table 13.

34 #212231 ©2008 IDC

T A B L E 1 3

W or l dw i d e H DD R evenu e f o r C on sum e r E l e c t r o n i c s A pp l i c a t i o n s , 20 07 � 20 1 2 ( $M )

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Set-top box/PVR/DTV 1,619 1,951 2,145 2,391 2,595 2,789 11.5

Mobile phones/PDAs/SHDs 5 � � � � � NA

Game consoles/HHs games

674 874 998 1,409 1,575 1,444 16.4

Auto/Nav/PND 219 202 244 300 370 404 13.0

Digital cameras/ camcorders

186 284 314 335 321 267 7.6

Digital audio/PMPs 1,053 884 731 434 110 86 -39.4

Total 3,756 4,196 4,432 4,870 4,972 4,990 5.8

Note: See Table 3 for key forecast assumptions.

Source: IDC, 2008

HDD Form Factor Outlook

Shipment of mobile 2.5in. HDDs will surpass desktop-class 3.5in. HDDs by 2010 and will represent 50% of total HDD shipments by 2012. Mobile 2.5in. HDD shipments represented 33% of total HDD unit shipments in 2007.

The HDD form factor with the fastest 2007�2012 CAGR is 2.5in. enterprise-class HDDs. Unit shipments are expected to increase from 8.7 million units in 2006 to 36.0 million units in 2012, a CAGR of 33%.

We expect 3.5in. desktop-class HDD shipments will remain relatively flat. Demand from PC markets will decline but will be offset by growth from PVR, enterprise market, and personal storage markets.

Tables 14�20 detail IDC's HDD forecast and associated assumptions by HDD form factor.

©2008 IDC #212231 35

T A B L E 1 4

W o r l dw i d e M o b i l e - C l a s s 1 . 0 i n . a n d 1 . 3 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000)

4�4.9GB 46.0 � � � � � NA

5�5.9GB � � � � � � NA

6�7.9GB 111.0 � � � � � NA

8�9.9GB 389.0 � � � � � NA

10�11GB 8.0 � � � � � NA

12�14GB 130.0 � � � � � NA

15�19GB � � � � � � NA

20�29GB � � � � � � NA

30�39GB 0.1 676.5 484.7 � � � NA

40�49GB � 431.6 1,119.3 � � � NA

50�59GB � � 150.0 150.0 � � NA

60�79GB � � 161.6 1,551.2 204.0 � NA

80�99GB � � � 155.7 956.2 � NA

Total 684.1 1,108.1 1,915.6 1,856.9 1,160.3 � NA

Revenue ($M) 37 57 97 93 56 � NA

ASP ($) 54 51 51 50 48 � NA

Terabyte shipped (000) 6 38 77 113 89 � NA

Average 1.0in. or 1.3in. HDD capacity shipped (gigabyte)

8 34 40 61 76 � NA

Notes: 1.0in. HDD shipments ceased in 2007. Samsung introduced a 1.3in. form factor HDD in 2007, and will likely be the only supplier. Virtually all shipments in 2007 were 1.0in. form factor products. All shipments from 2008 onward are assumed to be 1.3in. form factor only. See Table 3 for key forecast assumptions.

Source: IDC, 2008

36 #212231 ©2008 IDC

T A B L E 1 5

W o r l dw i d e M o b i l e - C l a s s 1 . 8 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000)

20�29GB 480 � � � � � NA

30�39GB 8,527 1,097 � � � � NA

40�49GB 1,330 1,148 161 � � � NA

50�59GB 2,302 1,732 1,029 250 � � NA

60�79GB 6,992 10,049 6,280 2,481 278 � NA

80�99GB 326 273 � � � � NA

120�159GB 22 1,077 4,178 6,267 4,691 2,217 152.3

160�179GB 1,070 5,051 9,082 11,249 10,153 6,201 42.1

180�199GB � � � � � � NA

200�239GB � � � � 557 297 NA

240�299GB � 8 529 2,557 7,337 8,793 NA

300�399GB � � 64 349 1,714 7,351 NA

400�499GB � � � � � � NA

500�599GB � � � � 181 1,237 NA

600�699GB � � � � � 26 NA

Total 21,049 20,434 21,323 23,153 24,912 26,121 4.4

Revenue ($M) 1,315 1,329 1,361 1,418 1,522 1,598 4.0

ASP ($) 62 65 64 61 61 61 -0.4

Terabyte shipped (000) 1,223 1,953 2,678 3,516 4,795 6,503 39.7

Average 1.8in. HDD capacity shipped (gigabyte)

58 96 126 152 192 249 33.8

Notes: CE applications will predominately use 3,600rpm 1.8in. HDDs to reduce power consumption. PC applications will predominately use 5,400rpm 1.8in. HDDs to achieve acceptable PC performance. The 1.8in. form factor will be an early adopter of new HDD technologies to ship 500GB and higher capacity products. See Table 3 for key forecast assumptions.

Source: IDC, 2008

©2008 IDC #212231 37

T A B L E 1 6

W o r l dw i d e M o b i l e - C l a s s 2 . 5 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000)

20�29GB 4,834 1,850 � � � � NA

30�39GB 2,766 787 � � � � NA

40�49GB 15,640 4,918 1,719 330 � � NA

50�59GB 14,653 8,691 2,723 772 � � NA

60�79GB 40,824 26,530 19,325 10,225 4,815 1,304 -49.8

80�99GB 3,843 � � � � � NA

120�159GB 45,668 60,778 32,475 19,209 11,104 2,704 -43.2

160�179GB 34,519 73,357 92,973 67,811 37,188 24,369 -6.7

180�199GB � � � � � � NA

200�239GB 3,622 670 � � � � NA

240�299GB 6,492 36,753 86,133 108,183 106,152 103,491 74.0

300�399GB 428 8,855 35,799 83,673 112,785 108,711 202.7

400�499GB 1 63 375 1,231 5,800 9,803 528.4

500�599GB 0 1,246 13,929 49,861 102,427 150,524 1,146.6

600�699GB � 1 393 2,149 5,006 8,495 NA

700�999GB � � 24 1,451 6,560 13,194 NA

1.0�1.49TB � � 227 1,173 4,063 19,749 NA

>=1.5TB � � � � � 438 NA

Total 173,290 224,500 286,095 346,068 395,900 442,782 20.6

38 #212231 ©2008 IDC

T A B L E 1 6

W o r l dw i d e M o b i l e - C l a s s 2 . 5 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Revenue ($M) 9,670 11,909 14,764 17,371 19,698 22,357 18.2

ASP ($) 59 56 55 53 54 55 -1.3

Terabyte shipped (000) 18,090 33,330 57,776 90,438 125,558 167,418 56.1

Average 2.5in. HDD capacity shipped (gigabyte)

110 157 214 279 343 412 30.2

Notes: All figures include 2.5in. capacity-optimized HDDs for enterprise applications. 2.5in. capacity-optimized HDDs for enterprise applications will be predominately 3-disk configurations. 2.5in. capacity-optimized HDDs for enterprise applications may employ either SATA or SAS interfaces. A higher percentage of HDD shipments will be >5,400rpm spin speed products over the forecast period. SATA will be the predominate interface used on 2.5in. HDDs for portable PC and other applications. See Table 3 for key forecast assumptions.

Source: IDC, 2008

T A B L E 1 7

W o r l dw i d e D e s k t o p - C l a s s 3 . 5 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000)

40�49GB 4,281 � � � � � NA

50�59GB 624 � � � � � NA

60�79GB 88,983 46,483 12,132 3,326 � � NA

80�99GB � � � � � � NA

120�159GB 2,004 � � � � � NA

160�179GB 78,986 89,239 69,880 38,470 15,707 6,662 -39.0

180�199GB � � � � � � NA

200�239GB 1,774 1,026 � � � � NA

240�299GB 40,657 69,321 91,756 97,736 87,663 76,442 13.5

©2008 IDC #212231 39

T A B L E 1 7

W o r l dw i d e D e s k t o p - C l a s s 3 . 5 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

300�399GB 28,469 29,439 38,568 37,215 31,837 17,142 -9.6

400�499GB 4,460 1,527 492 � � � NA

500�599GB 29,169 47,947 64,003 79,200 93,114 102,014 28.5

600�699GB 5 331 1,463 3,997 7,166 4,450 288.9

700�999GB 5,417 8,384 8,295 7,434 6,998 6,328 3.2

1.0�1.49TB 1,316 7,889 18,639 34,330 52,420 73,883 123.8

>=1.5TB � � 100 2,074 6,845 14,807 NA

Total 286,146 301,585 305,330 303,782 301,750 301,729 1.1

Revenue ($M) 16,254 16,386 16,195 15,711 15,520 15,327 -1.2

ASP ($) 57 54 53 52 51 51 -2.2

Terabyte shipped (000) 61,458 83,925 107,319 132,974 164,579 201,477 26.8

Average 3.5in. HDD capacity shipped (gigabyte)

215 278 351 438 545 668 25.5

Notes: All figures include 3.5in. capacity-optimized HDDs for enterprise applications. 3.5in. capacity-optimized HDDs for enterprise applications may employ SATA, SAS, or Fibre Channel interfaces. Approximately 80% of desktop-class 3.5in. HDDs for PVR applications will be single disk products. Approximately 60% of desktop-class 3.5in. HDDs for desktop PC applications will be single disk products. SATA will be the predominate interface used on 3.5in. HDDs for desktop PC and other applications. See Table 3 for key forecast assumptions.

Source: IDC, 2008

40 #212231 ©2008 IDC

T A B L E 1 8

W o r l dw i d e E n t e r p r i s e - C l a s s 2 . 5 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000)

30�39GB 614 692 � � � � NA

60�79GB 4,402 3,758 2,723 772 � � NA

120�159GB 3,685 7,614 8,523 8,211 5,681 2,704 -6.0

300�399GB � 234 4,906 11,793 19,501 24,236 NA

400�499GB � � � 595 4,234 8,744 NA

600�699GB � � � � � 357 NA

Total 8,701 12,298 16,153 21,371 29,416 36,040 32.9

Revenue ($M) 1,362 1,699 2,095 2,625 3,471 4,020 24.2

ASP ($) 107 406 1,410 2,077 2,759 3,326 98.7

Terabyte shipped (000) 887 1,491 2,925 5,068 8,591 11,817 67.8

Average 2.5in. Enterprise HDD capacity shipped (gigabyte)

102 121 181 237 292 328 26.3

Notes: The highest capacity 10,000rpm 2.5in. enterprise-class HDD in 2010 will be 450GB. The highest capacity 15,000rpm 2.5in. enterprise-class HDD in 2010 will be 150GB. 15,000rpm 2.5in. enterprise-class HDD volumes will remain less than 20% of annual shipments. SAS will be the predominate interface used on enterprise-class 2.5in. HDDs. See Table 3 for key forecast assumptions.

Source: IDC, 2008

©2008 IDC #212231 41

T A B L E 1 9

W o r l dw i d e E n t e r p r i s e - C l a s s 3 . 5 i n . H D D A n a l y s i s , 2 0 0 7 � 2 0 1 2

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000)

30�39GB 589 � � � � � NA

60�79GB 6,102 1,694 285 � � � NA

120�159GB 8,662 8,011 4,621 1,601 322 � NA

300�399GB 5,744 8,312 7,477 5,324 3,858 1,240 -26.4

400�499GB 135 1,864 2,350 2,836 2,790 3,063 86.7

600�699GB � 125 2,264 4,197 4,192 4,645 NA

Total 21,232 20,006 16,997 13,958 11,163 8,948 -15.9

Revenue ($M) 3,746 3,692 2,942 2,376 1,811 1,449 -17.3

ASP ($) 176 185 173 170 162 162 -1.7

Terabyte shipped (000) 3,520 4,663 5,336 5,618 4,976 4,537 5.2

Average 3.5in. HDD capacity shipped (gigabyte)

166 233 314 403 446 507 25.1

Notes: The increase of the ASP in 2008 reflects a strong shift to 15,000rpm spin speed and higher capacity HDDs. The highest capacity 10,000rpm and 15,000rpm 3.5in. enterprise-class HDD in 2010 will be 600GB. A higher percentage of HDD shipments will be 15,00rpm spin speed over the forecast period. See Table 3 for key forecast assumptions.

Source: IDC, 2008

42 #212231 ©2008 IDC

T A B L E 2 0

W or l dw i d e H DD Sh i pmen t s b y C apa c i t y R an ge , 2 00 7 �2 0 12 : A l l H DD F o r m F ac t o r s

2007 2008 2009 2010 2011 2012 2007�2012 CAGR (%)

Shipments (000)

<5GB 156 � � � � � NA

5�9.9GB 500 � � � � � NA

10�19GB 138 � � � � � NA

20�29GB 5,314 1,850 � � � � NA

30�39GB 11,882 2,560 485 � � � NA

40�49GB 21,251 6,498 3,150 480 � � NA

50�59GB 23,682 12,117 4,198 2,574 60 � NA

60�79GB 136,799 83,061 37,738 16,188 5,233 1,304 -60.6

80�99GB 4,169 273 � � � � NA

120�159GB 56,355 69,866 41,274 27,077 16,117 4,921 -38.6

160�179GB 114,576 167,647 171,935 117,530 63,047 37,232 -20.1

180�199GB � � � � � � NA

200�239GB 5,396 1,697 � � 557 297 -44.0

240�299GB 47,148 106,083 178,417 208,476 201,153 188,726 32.0

300�399GB 34,641 46,606 81,908 126,561 150,195 134,444 31.2

400�499GB 4,596 3,453 3,217 4,067 8,590 12,865 22.9

500�599GB 29,169 49,193 77,932 129,060 195,722 253,775 54.1

600�699GB 5 458 4,121 10,343 16,364 17,616 412.1

700�999GB 5,417 8,384 8,319 8,885 13,558 19,522 29.2

1.0�1.49TB 1,316 7,889 18,866 35,503 56,482 93,633 134.6

>=1.5TB � � 100 2,074 6,845 15,245 NA

Total 502,511 567,633 631,660 688,818 733,924 779,579 9.2

Note See Table 3 for key forecast assumptions.

Source: IDC, 2008

©2008 IDC #212231 43

M a r k e t C o n t e x t

A comparison of IDC's 2007 and 2008 HDD market forecasts reveals a unit delta between the two forecasts representing higher unit growth rate and revenue assumptions resulting primarily from updated PC and personal storage forecasts that are generating stronger HDD demand (see Table 21 and Figure 8). For document containing the previous forecast, see Worldwide Hard Disk Drive 2007�2011 Forecast Update (IDC #209583, November 2007).

T A B L E 2 1

W o r l dw i d e H D D S h i p m e n t s a n d R e v en u e , 2 0 0 5 � 2 0 1 2 : C o m p a r i s o n o f 2 0 0 7 a n d 2 0 0 8 F o r e c a s t s

2005 2006 2007 2008 2009 2010 2011 2012

Shipments (000)

2008 forecast 380,736 435,878 502,511 567,633 631,660 688,818 733,924 779,579

2007 forecast 380,736 435,878 496,943 557,783 609,907 646,407 679,849 NA

Revenue ($B)

2008 forecast 27.76 29.59 32.39 35.08 37.45 39.59 42.08 44.75

2007 forecast 27.76 29.59 32.08 35.53 37.70 39.04 40.22 NA

Note: See Worldwide Hard Disk Drive 2007�2011 Forecast Update (IDC #209583, November 2007) for prior forecast.

Source: IDC, 2008

44 #212231 ©2008 IDC

F I G U R E 8

W o r l dw i d e H D D S h i p m e n t s a n d R e v en u e , 2 0 0 5 � 2 0 1 2 : C o m p a r i s o n o f 2 0 0 7 a n d 2 0 0 8 F o r e c a s t s

0100200300400500600700800900

2005 2006 2007 2008 2009 2010 2011 2012

Ship

men

ts (M

)

05101520253035404550

Rev

enue

($B)

2008 shipment forecast2007 shipment forecast2008 revenue forecast2007 revenue forecast

Source: IDC, 2008

When viewed from the perspective of terabytes shipped, a comparison of IDC's 2007 and 2008 HDD market forecasts shows that annual HDD terabyte shipments are significantly higher in this forecast iteration. By 2012, the HDD industry will more than quadruple the total HDD capacity shipped in 2007 to meet the growing storage requirements of an expanding digital world. HDD capacities are increasing in part due to demand, and in part because HDD industry dynamics "incentivize" HDD OEMs to race to the next HDD capacity point and effectively reset pricing for a drive with a fixed number of components.

E S S E N T I AL G U I D A N C E

HDD industry participants should consider the following:

! Expect continued expansion of the digital world. At the same time, expect that storage requirements will become increasingly diverse for hard disk drives. Increasingly, value will be placed on HDDs that deliver improved capacity and performance, data security, and lower power consumption. Refocus and repurpose research and development resources accordingly.

©2008 IDC #212231 45

! Diversify HDD product offerings for profitability. The enterprise-class HDD segment provides a good example where developing new HDD form factors and providing a greater variety of interfaces and spin speeds to meet changing market requirements can slow HDD price-per-gigabyte erosion. Equally important is leveraging existing HDD platforms whenever possible to increase component commonality.

! Plan for increasing seasonality of HDD demand from the first half to the second half of a given calendar year. Even with core, traditional HDD markets, the trend for greater seasonality from the first half to the second half of the calendar year is growing. Resist the temptation to add capacity to meet peak demand in the second half of a given calendar year that culminates in aggressive pricing to fill factories in seasonally slow quarters. This will ensure more fully utilized assets year round and better overall HDD pricing and revenue.

! Remain vigilant to SSD developments. But realize that the price of SSDs through at least 2010 will inhibit SSD adoption and the markets that are less price sensitive are quite small; hence, the incursion of SSDs into current HDD markets will be minimal. Conversely, HDD OEMs should consider leveraging HDD technology into SSD solutions and adding SSDs to the existing portfolio of HDD storage products in the future.

L E AR N M O R E

R e l a t e d R e s e a r c h

! Worldwide Hard Disk Drive Quarterly: CY 4Q07 Summary and Outlook (IDC #211571, March 2008)

! Worldwide Removable Hard Disk Drive 2008�2012 Forecast and Analysis: The Quest for a Viable Tape Replacement (IDC #210169, January 2008)

! Worldwide Storage 2008 Top 10 Predictions: New Paradigms (IDC #209796, December 2007)

! Worldwide Digital Camcorder Storage 2007�2011 Forecast (IDC #209603, November 2007)

! Worldwide Hard Disk Drive 2007�2011 Forecast Update (IDC #209583, November 2007)

! PC Component and System Demand Exceeds Expectations for Two Quarters in a Row: Explanation, Meaning, and Outlook (IDC #209353, November 2007)

! Worldwide Solid State Drive 2007�2011 Forecast and Analysis: Finding Space in the Expanding Digital Universe (IDC #207739, July 2007)

! The Future of Storage in Commercial PCs: A Commercial PC Buyer Survey and Study (IDC #207697, July 2007)

! Worldwide Hard Disk Drive 2007�2011 Forecast and Analysis: Creating Space for an Expanding Digital Universe (IDC #206701, May 2007)

46 #212231 ©2008 IDC

D e f i n i t i o n s

Areal Density

Areal density (AD) is a measurement of recording density calculated by multiplying tracks per inch (tpi) by bits per inch (bpi), usually denoted in gigabits per square inch (Gb/sq. in.).

Average Sales Price or Average Unit Price

Average unit price (AUP) is the midyear average OEM/distributor price estimate paid for quantity (1,000+) contracts.

Hard Disk Drives

These are single- or multiple-platter, factory-sealed, magnetic data storage devices with disk diameters of 3.5in., 2.5in., 1.8in., 1.0in., and 0.85in. They typically have an OEM value from $30 to $500.

Current and historical products that meet these criteria include the following:

! The 5.25in. drive reached its end of life in 1999.

! The 3.5in. drives typically range in capacity from 40GB to 1TB from vendors such as Seagate, Western Digital, Hitachi GST, Samsung, and Excelstor.

! The 2.5in. drives typically range in capacity from 20GB to 500GB from vendors such as Hitachi GST, Toshiba, Fujitsu, Samsung, Seagate, and Western Digital.

! The 1.8in. drive capacities currently range from 20GB to 160GB from Toshiba, Hitachi, Seagate, and Samsung.

! The 1.3in. drive was introduced by Samsung in 2007 and will begin to ship in volume in 2008.

! The 1.0in. drive reached its end of life in 2007.

! The 0.85in. drive reached its end of life in 2007.

Disks/Platters

These HDD components, also referred to as "media" or "disk media," are rigid substrates currently made from aluminum and glass (or glass ceramic). They are polished and magnetically coated through a sputtering/deposition process. The magnetic head in the disk drives writes and reads data on each side of a disk. Drive capacities are sometimes referred to as gigabytes per platter (GB/platter), which is the total capacity that can be stored by writing to both sides of the platter.

Hard Disk Drive Gigabytes and Terabytes

The capacity of 1GB is 1,073,741,824 bytes, or 1,0243 bytes. Conventionally, a byte is 8 bits of information. The capacity of 1TB is 1,000GBs.

©2008 IDC #212231 47

Most HDD manufacturers define 1GB as 1,000,000,000 bytes, or 1,0003 bytes. This can create confusion regarding the actual capacity of an HDD. The actual available capacity of an HDD is often presented to the host system at slightly less than the HDD OEM's stated capacity of the disk drive. The reason is the host system will often calculate the size of the hard drive by dividing by 1,0243 bytes instead of 1,0003 bytes.

As the capacity of a given HDD increases, the difference between the stated capacity of an HDD device and the capacity presented to the host device can also increase. We recognize this potential to overstate gigabytes and terabytes.

To further confuse matters, the actual capacity of a given HDD is often higher than what is presented to the host system. In addition to storing user data, the HDD stores header and error correction code data with each byte of user data. Further, spare blocks or addresses are often supplied within a given disk drive. These spare blocks are made available by the HDD controller only in a situation where certain areas of the disk surface (originally designated blocks) are deemed unusable at some point in time after the HDD is shipped. In such cases, leveraging the spare blocks preserves the original capacity of the HDD.

To maintain consistency with other areas of IDC research, all data and figures in this study, including terabytes shipped, reflects the stated capacity of HDDs as shipped and defined by HDD OEMs.

Performance-Optimized HDDs

This category includes hard disk drives in one of two form factor sizes:

! Large form factor (LFF): 3.5in. (25.4 x 101.6 x 146 mm)

! Small form factor (SFF): 2.5in. (15 x 69.85 x 100.45 mm)

These HDDs typically have spin speeds ≥10,000rpm and are designed for ≥1.2 million hours mean time between failure (MTBF), or ≤0.62% annual failure rate (AFR) under 24 x 7 always-on 50%-50% read/write operation. Additionally, these drives typically have native command queuing for a variety of enterprise ecosystem demands; rotational vibration sensors and controls to operate effectively in rackmount environments; and either a parallel SCSI, Serial Attached SCSI (SAS), or Fibre Channel interface.

Capacity-Optimized HDDs

This category includes hard disk drives in one of two form factor sizes:

! Large form factor: 3.5in. (25.4 x 101.6 x 146 mm)

! Small form factor: 2.5in.(exact dimensions not standard yet within the industry)

These HDDs typically have spin speeds <10,000rpm and are designed for ≥1.2 million hours mean time between failure, or ≤0.75% annual failure rate under 24 x 7 always-on 50%-50% read/write operation. In practice, however, these HDDs are typically used more in 80%-20% read/write applications. Increasingly, these drives typically have native command queuing for a variety of enterprise ecosystem

48 #212231 ©2008 IDC

demands and rotational vibration sensors and controls to operate effectively in rackmount environments. Most often, these drives are equipped with a Serial ATA (SATA) interface. However, capacity-optimized HDDs for enterprise applications on occasion may have either a SAS or a Fibre Channel interface, usually by specific customer request.

Server Blades

Simply put, this is the motherboard of a 1U, rack-optimized server turned 90 degrees so that its width is vertical (around 6U). Several servers could be stacked horizontally (as opposed to vertically) within a rack, thus consuming considerably less space. In turn, each server blade could potentially have one or more HDD mounted to the blade. It is likely that solid state drives will increasingly be used instead of an HDD on server blades.

Solid State Drives

A solid state drive (SSD) is a semiconductor-based block storage device that behaves as a virtual HDD and appears to the host device as a disk drive. The SSD form factor may be similar to a standard HDD form factor, enabling the SSD, in many cases, to be a drop-in replacement for an HDD. SSDs are connected to the host device, including servers or SANs, via standard interfaces such as parallel SCSI, Serial Attached SCSI, Fibre Channel, and parallel and serial ATA interfaces.

Unit Shipments

Unit shipments measure sales by supplier through all distribution channels (e.g., OEM, distributor, VAR/VAD, captive, and retail). Units are counted as they are recognized as revenue by the HDD supplier. Unit shipments are in thousands in this document, unless otherwise denoted.

Value of Shipments

The value of shipments is the product of unit shipments and midyear AUP, also referred to as revenue.

I D C S y s t e m C l a s s i f i c a t i o n s

Traditional Computing Applications

Enterpr ise Storage Systems

This system platform basically equates to the combination of entry servers and multiuser systems. Included in this segment are storage systems having more than three drives and potentially hundreds of disk drives integrated into them. Price points can be less than $1,000 to more than $1 million. Multiuser storage systems can either be internal to the server or externally attached as either a storage area network (SAN) or as a network-attached storage (NAS) appliance.

This segment also includes what were traditionally called entry servers � servers priced at less than $25,000. The entry server segment includes PC servers as a subset. PC servers are distinct from desktop systems being used as servers. They

©2008 IDC #212231 49

are products designed specifically to be used as servers. These servers typically have enhanced system buses, extra space for multiple disk drives, and redundant hardware components. They are predominantly Intel architecture (x86) servers priced at less than $25,000, but a few models will exceed this pricing band when fully configured.

Portable PCs

Portable PCs (also referred to as PC notebooks or mobile PCs) as defined in this study represent two categories: mobile and ultramobile. Both these categories of devices have an Intel architecture (x86, including compatibles) microprocessor and are designed primarily as portable single-user devices. They are capable of supporting attached peripherals and are programmable in high-level languages that can run an off-the-shelf PC operating system such as Windows. Within these two categories of portable PCs are numerous form factors defined within IDC's PC taxonomy. A brief example of two portable PC form factors follows:

! Thin-and-light notebooks encompass the largest portion of the PC market with 12.x to 15.x size screens. The vast majority of thin-and-light notebooks are equipped with a 2.5in. HDD.

! Transportable PCs have screens 17in. and larger, are marketed as desktop PC replacements, and are meant to be more mobile than portable. The storage requirements for transportable PCs are generally higher than they are for other notebook categories, and some models include more than one HDD.

Other categories of portable PCs include mini notebooks, tablet PCs, and a variety of other configurations. Today, most portable PC form factors incorporate a mobile 2.5in. HDD.

Desktop PCs

A desktop PC has an Intel architecture (x86, including compatibles) microprocessor and is designed primarily as a single-user device. It is capable of supporting attached peripherals and is programmable in high-level languages that can run an off-the-shelf PC operating system such as Windows. Again, IDC's PC analyst team has defined several categories of desktop PCs in its taxonomy. The taxonomy includes several categories of towers, all-in-one configurations, and PC blades. A PC blade is similar to a server blade but is designed to support a single user equipped with an input/output device remote from the datacenter (refer back to the server blades definition).

Personal Storage Devices

IDC defines a personal storage device as a hard disk drive�based storage solution that is external to a host device and that is connected via a variety of interfaces, including USB, 1394 (FireWire), CompactFlash, eSATA, or wireless. This category includes the following:

! Personal DAS. This is a personal storage device that is directly attached to or controlled by a host device (hence the name direct-attached storage, or DAS). The storage device is accessed only via the host device to which it is attached,

50 #212231 ©2008 IDC

but it could be shared with other devices or users on a LAN. The device may be stationary or portable. The device may contain one or more HDDs and may have RAID functionality � although IDC believes the vast majority of personal DAS devices will contain only one HDD. The host device could be a computer or even a personal video recorder (PVR). In this application, it is frequently referred to as a sidecar. PVR sidecars will be captured in IDC's personal storage HDD forecast.

! Personal NAS. A personal NAS device is a storage device that is directly attached to a network, is controlled by the user (hence the name network-attached storage, or NAS), and supports only file storage. It is not to be confused with IDC's enterprise storage taxonomy, which defines NAS as an external disk storage system that attaches to a LAN, communicates at a file level, and contains an internal operating system optimized for file serving. Enterprise NAS devices are widely recognized to have a sophisticated software layer of management tools that accompany the device for successful integration into datacenter processes. In contrast, a personal NAS device is intended to be simple for a user to set up and operate. It does provide storage access for multiple users on a network, but with limited functionality. Personal NAS devices can have more than one HDD but often incorporate one high-capacity HDD. Connectivity is typically via Ethernet, although the potential for personal NAS devices with capability to support multiple simultaneous wireless access points is likely.

Tradit ional Workstat ions

Generally, traditional workstations offer the following features: Unix or OpenVMS operating systems; direct sales channels supplemented by OEM and VAR distribution channels; and various applications emphasizing technical, graphics, and networked business/professional application segments. Further:

! Traditional workstations include all of those in which Unix is the primary operating system. Many traditional workstations can run Windows operating systems; however, the workstations were originally designed for Unix and are targeted at that market. These products are included in the traditional workstations category.

! Personal workstations are counted in the personal computer segment. These systems typically represent a combination of PC economics and the functionality found in a traditional workstation. These systems are usually NT based.

Industr ial/Commercia l Appl icat ions

Several applications exist for hard disk drives outside of traditional computing applications. Examples include printers, miscellaneous office equipment, and a wide range of industrial and medical equipment. Owing to the relatively small volumes shipped to these markets, IDC has subsumed the forecast for these devices into the aftermarket HDD shipments for traditional computing markets.

©2008 IDC #212231 51

Consumer Electronics

Digita l Video Appl icat ions

This is a broad category name (a superset) that includes the following devices, as well as digital TV (DTV) and high-definition TV (HDTV):

! Personal video recorders (PVRs). These products use local storage to enable the user-controlled storage and playback of live digital video streams on a real-time basis. Core functionality includes the ability to simultaneously record and play back separate video streams or different portions of the same stream in real time. Most products also use programming information to allow deterministic and proactive recording of television shows, but this feature is not required. The most common application of PVRs is in the area of television broadcast control. PVR products are also referred to as digital video recorders (DVRs). Some HDTV and DTV sets may include some of the functionality of PVRs, and thus some will include hard drives. Long term, we expect many PVR-type systems to integrate audio jukebox capabilities.

! Set-top boxes. These devices act as receivers/tuners for television signals or service access. In most systems, they also control access to premium channels and provide other features such as pay per view (PPV). Owing to technical differences in the way video is transmitted, there are separate set-top boxes for cable and satellite systems. A class of set-top boxes that will allow consumers to receive DTV signals, decoding them for display on analog sets, is also emerging, and some of these will likely include local storage.

Automotive Appl icat ions

IDC has defined two automotive application segments for systems likely to adopt an HDD, in-vehicle installations (can be done in the factory, or aftermarket):

! Automotive OEM-installed in-vehicle navigation/telematics/infotainment systems. These devices are typically installed in-dash by the OEM and have a wide range of capabilities depending on the functionality bundled with the system. The most common in-vehicle device today with an embedded HDD is one designed for navigation applications. Over time, it's expected that these systems will have greater functionality to provide navigation, point-of-interest information, and individualized entertainment to each seat within the vehicle. Later in the forecast period, it's assumed telematics and diagnostic capabilities will be added to systems, pushing storage requirements higher. Telematics capabilities refer to communications between the installed system and other devices to provide additional navigation functionality. Diagnostic information is data recorded while the vehicle is in operation to assist with maintenance. It is assumed that primarily 2.5in. HDDs will be used for in-dash systems through most of this forecast period.

! Aftermarket in-vehicle navigation/telematics/infotainment systems. Generally, these are nearly identical to units shipped with a new vehicle but often have slightly fewer features. These systems are less likely to have telematics capabilities, hence storage requirements for these units could stagnate and eventually fall within the realm of economical SSD capacities.

52 #212231 ©2008 IDC

Portable navigations devices (PNDs) had at one time incorporated HDDs for storage. PNDs are small, portable handheld devices with GPS functionality and software to display navigational information. The small size of the PND makes it useful for all forms of travel. The migration to 3D maps in several geographies worldwide have driven PND storage requirements higher, but the storage requirements are low enough to be within the economical capacities of flash storage. It is assumed in IDC's outlook that all PNDs will ship with flash memory storage in future years.

Digita l Camcorders

Digital Camcorders are available with several options for storage on the device. It is assumed that a growing percentage of digital camcorders will adopt HDD storage. Camcorders will mainly utilize 1.8in. form factor HDDs, but 1.3in. HDDs will also be used.

Portable Media Players

These compressed audio and video devices have rapidly growing storage capacities, particularly devices oriented toward portable video consumption. Nevertheless, the rapid decline of the price of NAND flash storage combined with smaller file sizes associated with compressed media files is resulting in fewer opportunities for HDD storage. Additionally, embedded NAND flash storage in portable media players makes possible smaller and lighter devices that are more robust to shock events and extreme temperatures. It is assumed in IDC's outlook that a rapidly growing percentage of portable media players will ship with flash memory storage in future years.

A p p e n d i x : H D D S h i p m e n t s a n d R e v e n u e , 2 0 0 6 � 2 0 1 2

Tables 22 and 23 show HDD shipments and revenue by HDD form factor and consumption category.

©2008 IDC #212231 53

T A B L E 2 2

W o r l dw i d e H D D S h i p m e n t s A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( 0 0 0 )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

0.85in.

Traditional

Enterprise storage applications

� � � � � � � NA

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

80 30 � � � � � NA

Portable PCs � � � � � � � NA

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

1,210 71 � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs 21 9 � � � � � NA

Total 1,311 110 � � � � � NA

1.0in. and 1.3in.

Traditional

Enterprise storage applications

� � � � � � � NA

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

630 403 300 300 300 200 � NA

Portable PCs � � � � � � � NA

54 #212231 ©2008 IDC

T A B L E 2 2

W o r l dw i d e H D D S h i p m e n t s A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( 0 0 0 )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

987 � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND 205 77 � � � � � NA

Digital cameras/ camcorders

71 � 808 1,616 1,557 960 � NA

Digital audio/PMPs 2,091 205 � � � � � NA

Total 3,984 684 1,108 1,916 1,857 1,160 � NA

1.8in.

Traditional

Enterprise storage applications

� � � � � � � NA

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

494 294 421 513 750 1,000 2,000 46.7

Portable PCs 1,976 1,692 3,711 6,402 11,162 16,858 16,780 58.2

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/ HHs games

� � � � � � � NA

Auto/Nav/PND 1,331 218 73 525 825 1,237 1,408 45.2

©2008 IDC #212231 55

T A B L E 2 2

W o r l dw i d e H D D S h i p m e n t s A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( 0 0 0 )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

Digital cameras/ camcorders

1,678 3,137 4,547 4,452 5,007 5,566 5,933 13.6

Digital audio/PMPs 18,825 15,708 11,682 9,430 5,409 250 � NA

Total 24,303 21,049 20,434 21,323 23,153 24,912 26,121 4.4

2.5in. ATA

Traditional

Enterprise storage applications

657 1,542 1,374 2,389 4,109 6,613 11,201 48.7

Desktop PCs 1,639 1,786 4,904 11,671 21,188 31,092 33,729 80.0

Personal storage (external DAS and NAS)

4,206 10,503 21,190 37,802 58,525 77,589 91,880 54.3

Portable PCs 94,945 130,118 157,459 184,808 199,293 198,376 211,509 10.2

CE

Set-top box/PVR/DTV 336 761 1,616 3,688 6,431 11,553 16,037 84.0

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

14,585 15,663 20,554 23,425 27,448 31,729 32,090 15.4

Auto/Nav/PND 3,640 4,007 4,738 5,479 6,608 7,940 8,692 16.8

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs 1,028 212 368 680 1,096 1,591 1,605 50.0

Total 121,036 164,590 212,202 269,943 324,697 366,484 406,742 19.8

3.5in. ATA

Traditional

56 #212231 ©2008 IDC

T A B L E 2 2

W o r l dw i d e H D D S h i p m e n t s A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( 0 0 0 )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

Enterprise storage applications

7,564 10,758 13,063 14,920 18,149 23,545 31,104 23.7

Desktop PCs 202,144 211,122 210,099 203,287 191,678 183,767 176,548 -3.5

Personal storage (external DAS and NAS)

19,988 32,373 40,262 45,689 47,553 48,127 47,752 8.1

Portable PCs � � � � � � � NA

CE

Set-top box/PVR/DTV 27,366 31,291 37,406 40,686 45,747 45,803 45,923 8.0

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs 536 603 754 747 654 507 401 -7.8

Total 257,598 286,146 301,585 305,330 303,782 301,750 301,729 1.1

2.5in. ENT (SAS/SCSI/FC)

Traditional

Enterprise storage applications

2,433 8,701 12,298 16,153 21,371 29,416 36,040 32.9

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

� � � � � � � NA

Portable PCs � � � � � � � NA

©2008 IDC #212231 57

T A B L E 2 2

W o r l dw i d e H D D S h i p m e n t s A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( 0 0 0 )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs � � � � � � � NA

Total 2,433 8,701 12,298 16,153 21,371 29,416 36,040 32.9

3.5in. ENT (SAS/SCSI/FC)

Traditional

Enterprise storage applications

25,212 21,232 20,036 16,997 13,958 11,163 8,948 -15.9

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

� � � � � � � NA

Portable PCs � � � � � � � NA

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

58 #212231 ©2008 IDC

T A B L E 2 2

W o r l dw i d e H D D S h i p m e n t s A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( 0 0 0 )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs � � � � � � � NA

Total 25,212 21,232 20,036 16,997 13,958 11,163 8,948 -15.9

All form factors

Traditional

Enterprise storage applications

35,867 42,232 46,771 50,458 57,587 70,737 87,293 15.6

Desktop PCs 203,783 212,908 215,003 214,958 212,866 214,859 210,277 -0.2

Personal storage (external DAS and NAS)

25,397 43,602 62,173 84,304 107,128 126,916 141,632 26.6

Portable PCs 96,921 131,809 161,170 191,210 210,456 215,233 228,289 11.6

CE

Set-top box/PVR/DTV 27,702 32,052 39,022 44,374 52,178 57,356 61,959 14.1

Mobile phones/PDAs/ SHDs

2,197 71 � � � � � NA

Game consoles/HHs games

14,585 15,663 20,554 23,425 27,448 31,729 32,090 15.4

Auto/Nav/PND 5,176 4,301 4,811 6,004 7,433 9,178 10,100 18.6

Digital cameras/ camcorders

1,749 3,137 5,356 6,068 6,564 6,527 5,933 13.6

Digital audio/PMPs 22,501 16,736 12,803 10,858 7,158 2,348 2,006 -34.6

Total 435,878 502,511 567,664 631,660 688,818 734,884 779,579 9.2

Source: IDC, 2008

©2008 IDC #212231 59

T A B L E 2 3

W o r l dw i d e H D D R e v en u e A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( $ M )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

0.85in.

Traditional

Enterprise storage applications

� � � � � � � NA

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

5.9 2.1 � � � � � NA

Portable PCs � � � � � � � NA

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

94.3 4.9 � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs 1.6 0.6 � � � � � NA

Total 101.8 7.6 � � � � � NA

1.0in. and 1.3in.

Traditional

Enterprise storage applications

� � � � � � � NA

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

35.7 22.5 18.1 16.8 14.0 9.4 � NA

Portable PCs � � � � � � � NA

60 #212231 ©2008 IDC

T A B L E 2 3

W o r l dw i d e H D D R e v en u e A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( $ M )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

56.0 � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND 11.5 4.2 � � � � � NA

Digital cameras/ camcorders

4.1 � 38.5 80.1 79.1 46.6 � NA

Digital audio/PMPs 114.2 10.2 � � � � � NA

Total 221.5 36.9 56.5 96.9 93.0 56.0 � NA

1.8in.

Traditional

Enterprise storage applications

� � � � � � � NA

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

37.3 18.9 26.8 33.9 50.1 69.1 151.3 51.6

Portable PCs 124.4 104.8 223.8 405.8 714.6 1,098.9 1,115.8 60.5

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND 87.4 10.0 3.8 27.0 43.6 60.6 63.9 44.9

©2008 IDC #212231 61

T A B L E 2 3

W o r l dw i d e H D D R e v en u e A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( $ M )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

Digital cameras/ camcorders

96.8 185.6 245.7 234.0 256.4 274.7 267.3 7.6

Digital audio/PMPs 1,206.3 996.0 828.7 660.1 353.7 18.3 � NA

Total 1,552.3 1,315.4 1,329.0 1,360.9 1,418.3 1,521.6 1,598.3 4.0

2.5in. ATA

Traditional

Enterprise storage applications

45.1 84.3 74.6 145.8 258.0 448.0 805.7 57.1

Desktop PCs 99.4 95.5 267.7 631.4 1,110.5 1,631.3 1,748.8 78.9

Personal storage (external DAS and NAS)

312.2 709.4 1,409.0 2,761.6 3,877.1 5,024.4 6,566.5 56.1

Portable PCs 6,373.5 7,858.0 8,993.4 9,806.2 10,352.1 10,324.7 10,674.1 6.3

CE

Set-top box/PVR/DTV 22.2 33.3 75.4 172.1 284.7 503.1 710.5 84.4

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

697.9 674.4 874.4 997.9 1,184.4 1,389.7 1,444.1 16.4

Auto/Nav/PND 220.7 205.1 198.4 217.3 256.4 308.9 339.9 10.6

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs 67.7 9.5 16.0 31.4 48.2 68.2 67.4 48.0

Total 7,838.7 9,669.6 11,908.9 14,763.8 17,371.3 19,698.5 22,356.9 18.2

62 #212231 ©2008 IDC

T A B L E 2 3

W o r l dw i d e H D D R e v en u e A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( $ M )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

3.5in. ATA

Traditional

Enterprise storage applications

714.0 1,167.5 1,293.4 1,304.2 1,518.4 1,820.3 2,281.2 14.3

Desktop PCs 10,927.4 10,759.1 10,188.9 9,820.9 9,084.5 8,487.9 7,868.1 -6.1

Personal storage (external DAS and NAS)

1,688.5 2,705.3 2,988.6 3,057.8 2,969.7 3,096.0 3,080.2 2.6

Portable PCs � � � � � � � NA

CE

Set-top box/PVR/DTV 1,486.9 1,585.9 1,876.0 1,973.3 2,106.6 2,092.1 2,079.0 5.6

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs 35.0 36.5 39.2 39.1 31.7 23.9 18.5 -12.7

Total 14,851.9 16,254.3 16,386.2 16,195.3 15,710.9 15,520.2 15,327.0 -1.2

2.5in. ENT (SAS/SCSI/FC)

Traditional

Enterprise storage applications

405.5 1,362.1 1,699.0 2,094.7 2,625.0 3,471.4 4,019.8 24.2

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

� � � � � � � NA

Portable PCs � � � � � � � NA

©2008 IDC #212231 63

T A B L E 2 3

W o r l dw i d e H D D R e v en u e A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( $ M )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs � � � � � � � NA

Total 405.5 1,362.1 1,699.0 2,094.7 2,625.0 3,471.4 4,019.8 24.2

3.5in. ENT (SAS/ SCSI/FC)

Traditional

Enterprise storage applications

4,623.1 3,745.6 3,695.9 2,942.1 2,375.6 1,811.3 1,449.3 -17.3

Desktop PCs � � � � � � � NA

Personal storage (external DAS and NAS)

� � � � � � � NA

Portable PCs � � � � � � � NA

CE

Set-top box/PVR/DTV � � � � � � � NA

Mobile phones/PDAs/ SHDs

� � � � � � � NA

Game consoles/HHs games

� � � � � � � NA

64 #212231 ©2008 IDC

T A B L E 2 3

W o r l dw i d e H D D R e v en u e A n a l y s i s : C o n su m p t i o n b y H D D F o r m F a c t o r , 2 0 0 6 � 2 0 1 2 ( $ M )

2006 2007 2008 2009 2010 2011 2012

2007�2012

CAGR (%)

Auto/Nav/PND � � � � � � � NA

Digital cameras/ camcorders

� � � � � � � NA

Digital audio/PMPs � � � � � � � NA

Total 4,623.1 3,745.6 3,695.9 2,942.1 2,375.6 1,811.3 1,449.3 -17.3

All form factors

Traditional

Enterprise storage applications

5,787.8 6,359.5 6,762.9 6,486.8 6,777.0 7,551.0 8,556.0 6.1

Desktop PCs 11,026.7 10,854.6 10,456.6 10,452.3 10,195.0 10,119.2 9,616.9 -2.4

Personal storage (external DAS and NAS)

2,079.7 3,458.1 4,442.5 5,870.2 6,910.9 8,198.9 9,798.0 23.2

Portable PCs 6,497.9 7,962.8 9,217.2 10,212.0 11,066.6 11,423.6 11,789.9 8.2

CE

Set-top box/PVR/DTV 1,509.1 1,619.2 1,951.4 2,145.4 2,391.3 2,595.2 2,789.4 11.5

Mobile phones/PDAs/ SHDs

150.3 4.9 � � � � � NA

Game consoles/HHs games

697.9 674.4 874.4 997.9 1,184.4 1,389.7 1,444.1 16.4

Auto/Nav/PND 319.6 219.3 202.3 244.3 300.0 369.5 403.8 13.0

Digital cameras/ camcorders

101.0 185.6 284.2 314.1 335.5 321.3 267.3 7.6

Digital audio/PMPs 1,424.9 1,052.9 883.9 730.6 433.6 110.4 85.9 -39.4

Total 29,594.8 32,391.5 35,075.5 37,453.7 39,594.1 42,078.9 44,751.3 6.7

Source: IDC, 2008

©2008 IDC #212231 65

C o p y r i g h t N o t i c e

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